Vietnam bond yields at 14-wk high, supply expected to rise
HANOI Aug 26 (Reuters) - Yields on Vietnam's one-year bonds rose to the highest level in more than 14 weeks on Monday as demand remained weak on expectation of rising inflation in the months ahead.
Yields on the government bonds on one-year terms increased 0.064 point to 6.514 percent, the highest since May 17, according to Reuters fixings data.
Vietnam's inflation rate, which was nearly flat between March and July, edged up 0.83 percent in August from the previous month, the government said in a weekend report.
The government's annual inflation estimate for August was 7.5 percent.
Traders were bidding at 7 percent or above on the back of inflation returning in August and September, VietCapital Securities wrote in a note to clients on Monday.
Vietnam had the fastest-growing government bond market in emerging East Asia in the first quarter, the Asian Development Bank said, but bonds demand has since been subdued.
The State Treasury last week raised the winning yield on two-year government bonds to 7.3 percent and that on three-year debt to 7.7 percent, up 0.3 and 0.2 percentage point respectively, in order to sell more debt.
It hopes to raise 30 trillion dong ($1.42 billion) in the third quarter ending September to finance the state budget deficit this year but has so far generated only 9.5 trillion dong, or 32 percent of its quarterly target.
The yield may continue to rise in coming auctions, VietCapital Securities said. ($1=21,140 dong) (Compiled by Nguyen Phuong Linh; Editing by Martin Petty)