Banks Hunt to Buy Vietnam's International Bonds

Vietnamese commercial banks are hunting to buy part of US$750 million of Vietnam’s sovereign bonds issued three years ago as a way to disburse their ample foreign currency holdings.

 

Several banks are seeking the approval from the State Bank of Vietnam (SBV) to buy the international bonds.

 

Dong-denominated government bonds are now not attractive enough to them due to low coupons while banks are increasing their credit for enterprises.

 

Sources from the financial market said that the SBV has allowed a state-run bank to purchase some of these international government bonds at a coupon rate higher than the original rate of 7.2 per cent per annum.

 

However, foreign institutions and banks which hold the international Vietnamese government bonds don’t want to sell their holdings as the yields for the bonds are high while the interest rate for the greenback is low, the newspaper said.

 

A foreign fund in HCM City, which has invested in Vietnam's sovereign bonds, said it will not sell the bonds before the due date.

 

As planned, the Vietnamese government will also issue US$1 billion of foreign currency-denominated bonds within this year to raise domestic funds, and it raised only US$230 million in the first tranche in March.

 

State Treasury and Vietnam Development Bank, although having offered a large amount of g-bonds in auctions, failed to sell the bonds as the yield rates could not meet buyers’ demand. Banks and institutions, main buyers of bonds, expect yields to rise further in the coming months. (Saigon Economic Times)