Vietnam five-year bonds fall on speculation bank buying to slow

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Vietnam's five-year government bonds fell for a third day on Tuesday, pushing the yield to the highest level this month, on speculation banks will reduce holdings so they can lend more this half. The dong was steady.

The government is targeting 2 percent credit growth per month in the second half, Deputy Prime Minister Nguyen Xuan Phuc said in June. The overnight interbank deposit rate rose for the first time in four days, signaling increased demand for funds in the banking system.

"Banks will be trying to lend money out, so they will have less money to buy bonds," said Nguyen Tan Thang, head of fixed- income research at Ho Chi Minh City Securities Corp.

The yield on the government's benchmark five-year bonds rose two basis points, or 0.02 percentage point, to 9.79 percent, according to a daily fixing rate from banks compiled by Bloomberg. That's the highest level since June 27.

The dong was little changed at 20,880 per dollar as of 3:49 p.m. Tuesday in Hanoi, according to data compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.

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