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Bond yields fall on central bank credit growth cap
Vietnamese government bond yields fell by around 30 basis points in the past week as banks sought to buy more of the debt to park funds after the central bank sought to rein in credit growth due to inflation worries.
Bond dealers said yields on two-year government dong bonds fell to 9.2 percent this week from around 9.5 percent a week ago.
The yields on the one-year papers also fell to around 8.3 percent this week, from 8.5-8.6 percent last week.
Last week the State Bank of Vietnam told big state-owned banks and partly private lenders Vietcombank and VietinBank to limit their credit growth at 25 percent this year to prevent the return of high inflation.
An economic slump in the wake of the global financial crisis and a rapid retreat in energy and food prices knocked inflation from last year's multi-year peaks across Asia.
But early signs of economic recovery, a rebound in costs of commodities and the build-up of liquidity due to stimulus spending, made several of the region's central banks concerned again about the return of inflationary pressures.
Vietnam's central bank data showed loans in the whole banking system had risen 17 percent in the first half of 2009.
"Given the credit growth so far this year, at some banks it was as high as more than 30 percent, some banks must have negative credit growth in the second half to comply with the central bank's regulations," said a banker in Ho Chi MinH City.
"That's why we are going to see demand for bonds rising strongly in the next couple of weeks," he added.
Bankers said most of the loan growth came from the government's stimulus package which includes an interest subsidy programme worth $1 billion.
The central bank said last Friday banks had lent VND377.7 trillion so far this year under the subsidy programme, which covers 4 percentage points of interest rates on the loans.
Bankers said that leaves only $4 billion worth of loans under the subsidy programme to be lent out between now and the year end.
"Banks would have to be very selective in lending to new projects under the subsidy programme in the second half with only $4 billion left and the credit growth capped," a banker in Hanoi said.
Vietnam's economy, buffeted by the global recession, grew by an estimated 3.9 percent in the first half of 2009 from the same period last year, prompting the government to rush a series of measures including cheap loans and tax break to boost growth.
vietnews, Reuters
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