Vietnam Fails to Sell 1 Trillion Dong of Local Bonds (Update1)
By Nguyen Kieu Giang and Laura Cochrane
June 18 (Bloomberg) -- Vietnam's State Treasury failed to sell 1 trillion dong ($56 million) of local-currency bonds for the second time this month after investors demanded higher rates than the government was willing to pay.
The government offered a maximum coupon of 9 percent for three-year notes, lower than the 9.5 percent sought by bidders, according to a statement posted on the Web site of the Hanoi Securities Trading Center, where the auction took place. The 9.1 percent the government offered for five-year securities was less than the 10 percent investors demanded.
Vietnam also was unable to sell 1 trillion dong of bonds on June 4, joining Latvia, Romania and Hungary among emerging- market countries that have struggled to sell local-currency government bonds. Investors are demanding higher yields to protect against declines in developing nations' currencies even as inflation slows, according to Luis Costa, an emerging-market debt strategist at Commerzbank AG in London.
"Despite the deflation cycle in most of these countries," invertors are pricing in "significant currency risk in holding local debt," Costa said in an interview.
Vietnam's dong has dropped 6.9 percent against the U.S. dollar in the past year. It fell 0.3 percent to 5.6057 per dollar today. The yield on Vietnam's benchmark five-year note rose to 9.31 today from 8.96 in April. Inflation in the country slowed in May to an annual rate of 5.6 percent from 28.3 percent in August.
Latvia didn't sell about 50 million lati ($99.9 million) in Treasury bills on June 3 after a shortage of the currency in the market helped drive up the overnight lending rate to a then- record 16.4 percent, according to the Riga Stock Exchange. The rate reached an all-time high of 19.4 percent June 12.
Romania rejected all bids for $250 million lei ($83 million) of five-year bonds on March 5 because it considered the price "unacceptable," according to the Ministry of Public Finances' Web Site.
Hungary suspended all bond sales after rejecting bids at a tender on Oct. 22. The country resumed sales in April in smaller quantities and today sold 16.5 billion forint ($81 million) of debt, 1.5 billion more than offered.
To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net
Last Updated: June 18, 2009 12:41 EDT
By Nguyen Kieu Giang and Laura Cochrane
June 18 (Bloomberg) -- Vietnam's State Treasury failed to sell 1 trillion dong ($56 million) of local-currency bonds for the second time this month after investors demanded higher rates than the government was willing to pay.
The government offered a maximum coupon of 9 percent for three-year notes, lower than the 9.5 percent sought by bidders, according to a statement posted on the Web site of the Hanoi Securities Trading Center, where the auction took place. The 9.1 percent the government offered for five-year securities was less than the 10 percent investors demanded.
Vietnam also was unable to sell 1 trillion dong of bonds on June 4, joining Latvia, Romania and Hungary among emerging- market countries that have struggled to sell local-currency government bonds. Investors are demanding higher yields to protect against declines in developing nations' currencies even as inflation slows, according to Luis Costa, an emerging-market debt strategist at Commerzbank AG in London.
"Despite the deflation cycle in most of these countries," invertors are pricing in "significant currency risk in holding local debt," Costa said in an interview.
Vietnam's dong has dropped 6.9 percent against the U.S. dollar in the past year. It fell 0.3 percent to 5.6057 per dollar today. The yield on Vietnam's benchmark five-year note rose to 9.31 today from 8.96 in April. Inflation in the country slowed in May to an annual rate of 5.6 percent from 28.3 percent in August.
Latvia didn't sell about 50 million lati ($99.9 million) in Treasury bills on June 3 after a shortage of the currency in the market helped drive up the overnight lending rate to a then- record 16.4 percent, according to the Riga Stock Exchange. The rate reached an all-time high of 19.4 percent June 12.
Romania rejected all bids for $250 million lei ($83 million) of five-year bonds on March 5 because it considered the price "unacceptable," according to the Ministry of Public Finances' Web Site.
Hungary suspended all bond sales after rejecting bids at a tender on Oct. 22. The country resumed sales in April in smaller quantities and today sold 16.5 billion forint ($81 million) of debt, 1.5 billion more than offered.
To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net
Last Updated: June 18, 2009 12:41 EDT