Vietnam’s Bonds Rise on Speculation of More Interest-Rate Cuts

Vietnam’s Bonds Rise on Speculation of More Interest-Rate Cuts

VietFinanceNews.com - Vietnam’s government bonds rose, pushing the benchmark five-year yield to the lowest level since September 2009, on speculation the central bank will cut borrowing costs to support the economy. The dong weakened.

“The State Bank of Vietnam is likely to deliver more cuts in the coming quarters to support spending” as domestic demand may remain subdued, Trinh D. Nguyen, a Hong Kong-based economist at HSBC Holdings Plc, wrote today in a commentary accompanying a manufacturing report. The HSBC Vietnam Manufacturing Purchasing Managers’ Index showed output declined in April for the sixth time in seven months. Vietnam’s central bank cut interest rates for the second time in less than a month in April.

“The bond market will continue to be active in coming months because a large number of Vietnam’s government bonds will mature in May and investors expect high profits from government bonds as interest rates decline,” Tran Thi Thanh Thao, a fixed- income analyst at Thang Long Securities Joint-Stock Co. wrote in a research note yesterday.

The yield on five-year government notes fell two basis points, or 0.02 percentage point, to 10.03 percent today, according to a daily fixing from banks compiled by Bloomberg. Yields have dropped for 15 straight days.

The dong fell 0.05 percent to 20,860 per dollar as of 3:16 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,828 today, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.

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