Vietnam's government bonds fell, sending the three-year yield to the highest level in more than two years, on speculation rising borrowing costs will crimp demand at an auction tomorrow. The dong was little changed.
The State Treasury will offer 6 trillion dong ($285.3 million) of two-, three-, and five-year notes tomorrow, according to a statement on the Hanoi Stock Exchange's website. The overnight interbank rate climbed for the first time in six days, rising five basis points, or 0.05 percentage point, to 0.93 percent, according to data compiled by Bloomberg.
The three-year yield jumped 23 basis points to 6.58 percent, the biggest increase since April 19, 2011, according to a daily fixing from banks compiled by Bloomberg. It has risen 38 basis point from 6.20 percent on June 6, the lowest level since at least July 2006. The five-year yield advanced 10 basis points, the most in 11 months, to 7.55 percent.
"Some banks are getting cautious and halted purchases amid new supplies coming, while borrowing costs increased in the interbank market," said Do Hoang Quynh Trang, a fixed-income trader at Ocean Commercial Joint-Stock Bank in Hanoi. "Bonds had gained for a long time and reached a level that prompted many traders to take profit."
The dong traded at 21,018 per dollar as of 3 p.m. in Hanoi, little changed from 21,016 yesterday, according to prices from banks compiled by Bloomberg.
The State Bank of Vietnam fixed its daily reference rate at 20,828, unchanged since Dec. 26, 2011, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.