Tuesday, July 08, 2008

Vietnam to sell 500 bln dong govt bonds on July 11

Mon Jul 7, 2008 12:22pm IST

HANOI, July 7 (Reuters) - Vietnam plans to raise 500 billion dong ($30.3 million) at a government bond auction late this week, the Hanoi stock market said on Monday.

The State Treasury will sell two-year bonds worth 200 billion dong and three-year bonds worth 300 billion dong on Friday and issue the debt on July 15, the over-the-counter exchange said in a statement.

The proceeds will finance major infrastructure projects such as roads, bridges and ports.

At its previous auction on June 27, the State Treasury sold 2 billion dong worth of two-year bonds, its first success in raising funds from selling government debt after seven auctions since late February at which it could not find any buyers.

The July 2010 bond sold on June 27 carried a yield of 11 percent.

Banks, which often buy government bonds, have been struggling to attract dong funds as the central bank tightened monetary supply by raising interest rates and ordered banks to buy debt to rein in annual inflation that hit 26.8 percent in June.

Prime Minister Nguyen Tan Dung has said Vietnam would further cut money supply to banks as a measure to curb double-digit inflation. The central bank aims to cap Vietnam's credit growth this year at 30 percent after a surge of 54 percent in 2007.

Ratings agencies have downgraded their outlook on Vietnam's sovereign ratings to negative noting that economic imbalances were greater than anticipated and policies had not dealt quickly or strongly enough with inflation. ($1=16,519 dong) (Reporting by Ho Binh Minh, Editing by Jacqueline Wong)