Vietnam Debt: how "shock" after VND devaluation – II
Posted by LeGianT on December 12, 2009
“Vietnam Risks a Balance of Payments Crisis”
Vietnam has the makings of a “classic” emerging-market crisis and investors should buy protection against a sovereign default, according to Nomura Holdings Inc.
- consumer price index,
- overheating economy and
- falling foreign-exchange reserves
“Macro policies are too loose, which is resulting in too strong import absorption, rapid credit growth and rising CPI inflation,” the Tokyo-based bank’s note said. That’s “all pointing to overheating.”
The cost of insuring Vietnam’s debt from default may surge to 400 basis points if the balance of payments issue becomes more serious, Nomura said. Five-year contracts closed at 231 basis points yesterday, according to prices from CMA DataVision in New York.