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Exit of foreign investors cause bonds to drop
Vietnam’s bonds dropped for the first time in seven days as a global stocks rout and seizing up of credit markets prompted overseas investors to cut holdings of emerging-market assets.
Lehman Brothers, once the fourth-biggest US investment bank, filed for bankruptcy this week and the Federal Reserve announced a bailout of American International Group, the largest US insurer by assets. Vietnam’s stock benchmark, the VNIndex, is down 12 percent from the end of last week.
“Foreign investors have increased selling after the bankruptcy of Lehman Brothers,” said Tran Kim Quy, deputy head of the treasury department of Hanoi Building Commercial Joint-Stock Bank. “Local investors don’t want to buy now, but wait for bond prices to fall more,” Quy said.
The yield on the benchmark five-year notes rose 13 basis points to 15.85 percent, according to a daily fixing price from 10 banks compiled by Bloomberg.
“Domestic investors are not so worried about getting affected by the global turmoil as they are in a good position with cash in abundance,” Quy said.
The State Treasury today failed to sell VND1 trillion (US$60 million) of two- and three-year bonds because investors asked for interest rates ranging between 15.5 and 16 percent, higher than levels deemed acceptable by the government, according to the Hanoi Securities Trading Center, where the auction took place.
The Vietnamese dong declined for a second day, falling 0.2 percent, to VND16,640 per dollar as of 3:15 p.m. in Hanoi, according to data compiled by Bloomberg.
The State Bank of Vietnam sold dong for foreign exchange to stabilize the local currency amid a surplus of US dollars at the nation’s banks, Vietnam News Agency reported today, citing Governor Nguyen Van Giau.
Thanhnien
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