HANOI, March 17 Rising Vietnam bond prices drove
yields to historic lows on Monday as banks reported strong
liquidity while their costs for raising funds are set to fall
after the central bank announced several key rate cuts, analysts
The yield on government bonds at one-year terms
dropped to the lowest on record at 5.3250 percent, according to
Reuters fixing data.
The two-year and three-year bond yields
hits their record lows, at 5.8917 percent and 6.2167
percent respectively. Seven-year bond yield dropped
0.0521 points to 8.2417 percent, also a record low.
"Bond yields extended the falls amid strong liquidity in
banks and difficulties in lending," said analyst Dau Thi Van Anh
at Vietcombank Securities.
As of March 13, banks posted negative credit growth, with
outstanding loans 1.03 percent lower than the end of 2013, while
their deposits rose 1.92 percent in the same period, the central
bank said on Monday, without giving any values.
"Credit institutions are reluctant to lend due to a lack of
credible borrowers," said analyst Do Bao Ngoc at VPBank.
Vietnam's central bank said on Monday it would cut a series
of key interest rates in a bid to boost the pace of economic
expansion at a time inflation has been low.
Lower rates implied a stable macroeconomic outlook and would
reduce the costs of raising funds at banks, Van Anh said.
Vietnam has raised a combined $2.87 billion worth of
government and government-backed bonds since the beginning of
this year, up 39 percent from the same time last year, according
to data compiled by Reuters.
Fixings of Vietnamese bond yields are calculated daily by
Reuters, using bid and ask yield rates contributed by both
foreign and domestic banks prior to 0400 GMT.
(Reporting by Mai Nguyen; Editing by Martin Petty)