Vietnam's two-year bonds advance ahead of auction; dong steady

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Vietnam's two-year bonds gained for a second day on speculation demand will rise at a debt auction tomorrow amid an economic slowdown. The dong was little changed.

The State Treasury will auction 6 trillion dong ($288 million) of bonds, according to the Hanoi Stock Exchange website. Government debt sale rose 37 percent in January from a year earlier, according to a research note from ACB Securities.

"The demand for bonds in 2013 will likely remain at a high level, which is fully reflected by the bond issuance results in the primary market and the increased trading value in the secondary market," ACB Securities analyst Le Huynh Nhut Hai wrote in the report today.

The yield on the two-year securities fell four basis points, or 0.04 percentage point, to 8.63 percent, according to a daily fixing from banks compiled by Bloomberg.

Credit growth may remain slow in the first months of the year, Prime Minister Nguyen Tan Dung said in a New Year's message on Jan. 1, after a slowdown in economic growth and rising bad debts crimped lending in 2012. Vietnam's economy expanded 5.03 percent last year, the slowest pace in 13 years.

The dong traded at 20,830 per dollar as of 2:10 p.m. in Hanoi, compared with 20,835 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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