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Fixed Income May 2012 - G-bonds in favour, yields likely to drop

Fixed Income
Fixed Income Summary High probability of further policy rate cuts by the SBV could drive demand higher for fixed income instruments especially from small and mid-size banks. Steepening of the yield curve will see traders favour short-term maturities. We recommend buying the 1-year, 2-year, and 3-year notes at yields of 9-9.2%. The VND remains stable and gold prices after falling sharply to around VND41mn/tael still looks unattractive as banks stop mobilizing gold.