Vietnam makes rare push into bond markets Vietnam is selling a rare new government bond as a rally in Vietnamese debt pushes the country's borrowing costs to record lows. The sale of new benchmark 10-year dollar-denominated debt has been marketed with a yield of 5.125 per cent and comes a few days after global credit rating agency Fitch upgraded Vietnam's credit rating from "B+" to "BB-," three notches below investment grade level. In July, Moody's also upgraded Vietnam's rating, moving it from B2 to B1. Following the upgrades, the country is seeking to refinance debts issued in previous years at lower rates. Hanoi is an infrequent borrower on international debt markets and the bond sale marks the first time that it has tapped global bond investors in more than four years. One banker said that the sale was likely to attract significant interest from emerging market investors because of the scarcity of new Vietnamese debt, the yield available and the improvements in the country's economic stability. The yield on the country's debt maturing in January 2020, which had a 10-year maturity when it was issued, has fallen to around 4 per cent as investors round the world hunt for yield amid record low interest rates. In its rating announcement, Fitch referenced Vietnam's increasing macroeconomic stability, faster pace of economic growth and stronger external finances. This year, the country is expected to grow 5.8 per cent and the government is targeting growth of 6.2 per cent in 2015, according to Prime Minister Nguyen Tan Dung. Vietnam is also emerging from a period of high inflation that saw prices rise more than 18 per cent in 2011. This year, the rate of inflation is expected to be below 5 per cent, the lowest in decades. The Ho Chi Minh stock market has gained more than 18 per cent this year, outpacing both the FTSE Frontier and Emerging indices and the country is moving ahead with its intention to restructure state enterprises. However, there has been a significant drop in tourism this year after tensions with China led to a riot in May that resulted in many foreign businesses being torched or ransacked. Risks from the country's banking system, high stock of foreign currency public debt and low domestic spending are still considered problematic by global investors. Foreign debt is forecast to hit close to 40 per cent of gross domestic product by the end of this year and, like many western countries, Vietnam experienced a property market boom in the 2000s that later faltered and left many homeowners unable to make repayments. Deutsche Bank, HSBC and Standard Chartered are the joint bookrunners on the sale with BNP Paribas, Daiwa and Mizuho as co-managers.