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Banks to be allowed use of dollar bonds as collateral
Commercial banks will be permitted to use government-issued dollar-denominated bonds as collateral when borrowing from the central bank.
The State Bank of Vietnam decided to allow lenders to use the debt as a “mortgage asset,” according to a statement posted on the website of the Hanoi Securities Trading Center Friday, where the bond auctions are held.
The State Treasury raised US$100 million by selling one-year dollar bonds Friday, in the first of three domestic sales this month.
The bonds were sold to yield 3 percent, according to an e-mailed statement sent by the Trading Center.
“This adds to the reasons why banks might wish to buy these bonds,” said Dominic Scriven, director of fund manager Dragon Capital in Ho Chi Minh City. The central bank has always accepted government bonds denominated in the local currency, he said. With the dollar bonds, banks “can hold on to them as an asset, or they can lend them to the central bank if they need liquidity.”
The Treasury plans to sell $100 million worth two-year notes on March 24, and a similar quantity of three-year debt on March 27.
A “temporary” dong shortage in the money market may encourage commercial banks to borrow from the State Bank of Vietnam, said Le Ba Hoang Quang, the Hanoi-based head of research at Sacombank Securities Inc.
Bloomberg, thanhnien
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