Vietnam Bonds Drop as Bank Demand Falls Before Lunar New Year

by lexie Tue Nov 29, 2011 3:37 pm

November 29, 2011

Vietnam Bonds Drop as Bank Demand Falls Before Lunar New Year

Vietnam’s two-year government bonds snapped a three-day rally on speculation banks have less funds to invest in the debt as the end of the year approaches. The dong was steady.

The Southeast Asian nation will celebrate the Lunar New Year, also known as the Tet festival, from Jan. 23 to Jan. 27.

“Commercial lenders are not interested in bonds as they need to ensure liquidity ahead of the Lunar New Year, when residents usually withdraw deposits,” said Tran Thi Ngoc Thanh, deputy manager of the investment-banking division at Sacombank Securities Joint-Stock Co. in Ho Chi Minh City.

Yields on the two-year debt rose five basis points, or 0.05 percentage point, to 12.49 percent, according to a daily fixing from banks compiled by Bloomberg.

The dong was unchanged at 21,009 per dollar as of 4:26 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank set the reference rate at 20,803, unchanged since Oct. 28, its website showed. The currency is allowed to trade up to 1 percent on either side of the official rate. (Bloomberg)

http://www.vietfinancenews.com/2011/11/vietnam-bonds-drop-as-bank-demand-falls.html