Vietnam one-year bond yield falls to 2006 low as bill rates drop

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Vietnam's government bonds gained, with the one-year yield sliding to the lowest level since 2006, after borrowing costs fell at a bill auction. The dong was little changed.

The State Treasury sold 2 trillion dong ($95 million) of 364-day securities to yield 5.68 percent yesterday. That compares with 6.03 percent at the previous offering on May 20.

"Investors have to look at relative yields of different securities," said Hoang Thanh Tam, head of the fixed-income department at Vietnam Maritime Commercial Joint-Stock Bank in Hanoi. "So when yields on the T-bills fall, bond yields also drop."

The one-year yield dropped 22 basis points, or 0.22 percentage point, to 5.77 percent, the lowest level since July 2006, according to a daily fixing from banks compiled by Bloomberg. Thefive-year yield fell nine basis points to 7.64 percent, the least since August 2007.

The dong traded at 21,010 per dollar as of 4:30 p.m. in Hanoi, compared with 21,008 yesterday, according to data compiled by Bloomberg. The central bank set its reference rate at 20,828, unchanged since December 2011, 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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