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Bonds fall as yields may need to rise to draw buyers
Vietnam’s five-year bonds dropped this week on speculation the treasury will have to offer higher yields to entice investors following at least six failed debt sales this year.
Yields on the five-year securities climbed to the highest level in more than six months as HSBC Holdings Plc forecast policy makers will also raise benchmark interest rates to slow a surge in loans. The government has been subsidizing lending as it seeks to boost economic growth amid the global recession.
Monetary authorities have “begun to raise primary issuance yields higher to attract buyers after repeated auction failures have put the government further behind in its bond issuance schedule,” Pieter van der Schaft, a Hong Kong-based strategist at HSBC, wrote in a research note.
Yields increased two basis points this week to 9.74 percent, and reached 9.75 percent, the highest since January, according to a daily fixings from 10 banks compiled by Bloomberg. A basis point is 0.01 percentage point. Bonds were unchanged Friday.
The government failed to draw buyers at a VND1.5 trillion (US$84 million) debt offering on Thursday. Vietnam needs the funds to finance an economic stimulus package valued at more than $8 billion.
Banks’ total outstanding loans rose 17.53 percent in the six months ended June compared with a year earlier, the central bank said in a statement on its website on July 7.
The central bank has set a 30 percent maximum target for loan growth this year, up from an earlier projection of 21 percent to 23 percent, HSBC said.
thanhnien, Bloomberg
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