Vietnam's bonds have worst week in a year on failed debt sales

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Vietnam's benchmark five-year bonds fell this week, with yields rising the most in a year, after a failed government debt auction. The dong advanced.

The State Treasury sold VND400 billion ($19.1 million) of two-, three- and five-year notes from the 5 trillion dong offered Thursday, according to statements on the Hanoi Stock Exchange's website. Bank for Social Policies also didn't sell any of the VND3 trillion of three- and five-year debt on June 20, according to the Hanoi Stock Exchange.

"Government bond auctions weren't active and winning yields rose sharply," Hanoi-based Bank for Investment & Development of Vietnam analysts including Hoang Nu Ngoc Thuy and Nguyen Thu Linh wrote in a research note. Bond yields may continue to "increase slightly," they said.

The yield on the five-year bonds climbed 20 basis points, or 0.20 percentage point, this week to 9.81 percent, the biggest increase since the period ended May 6, 2011, according to a daily fixing from banks compiled by Bloomberg. It rose 11 basis points on Friday.

At the government's debt sale, yields on two-year notes rose to 9.2 percent, compared with 8.89 percent at the previous auction on June 13. The rate on the three-year securities climbed to 9.4 percent from 9 percent, and the five year garnered 9.55 percent versus 9.45 percent.

The dong appreciated 0.4 percent to 20,875 per dollar this week as of 4:07 p.m. Friday in Hanoi, according to data compiled by Bloomberg. It advanced 0.2 percent today.

The State Bank of Vietnam set the currency's reference rate at 20,828 per dollar, unchanged since Dec. 26, according to its website. The dong is allowed to trade as much as 1 percent on either side of the rate.

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