Vietnam's two-year bond yield falls after action; dong stable

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Vietnam's two-year bond yield fell by the most in more than a month after interest rates dropped at a government debt action. The dong was little changed.

The State Treasury sold 2 trillion dong ($96 million) of two-year notes at 8.30 percent and 3 trillion dong of three-year securities at 8.53 percent yesterday, according to the Hanoi Stock Exchange website. Similar-maturity debt was sold at 8.64 percent and 8.65 percent, respectively, at previous auctions on Feb. 7 and Jan. 29.

"The decline in yields at the government bond action trimmed yields in the secondary market," said Pham Tri Hieu, a fixed-income trader at Military Commercial Joint-Stock Bank in Hanoi. "Banks are still keen on investing in bonds."

The two-year yield declined 19 basis points, or 0.19 percentage point, to 8.4 percent, the lowest level since Jan. 29, according to a daily fixing from banks compiled by Bloomberg. That's the biggest one-day decline since Jan. 15.

The three-year rate dropped 11 basis points to 8.58 percent.

The dong traded at 20,910 per dollar as of 4 p.m. in Hanoi, compared with 20,905 yesterday, according to data compiled by Bloomberg. The central bank set its 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 fixing.

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