Vietnam to sell 1 trillion dong govt bonds on Aug 8

HANOI, Aug 2 (Reuters) - Vietnam's State Treasury plans to raise 1 trillion dong ($60.63 million) at a government bond auction late next week, the over-the-counter exchange said.

The auction will sell Hanoi two-year bonds worth 500 billion dong and five-year bonds worth 500 billion dong next Friday, and the debt will be issued on Aug. 12, the exchange said in a statement seen on Saturday.

The proceeds will go to funding major infrastructure projects such as roads, bridges and ports.

At its latest auction on July 11, the State Treasury failed to sell any of its two-year and three-year bonds worth a combined 500 billion dong because no participants joined the auction.

On June 27, the State Treasury sold 2 billion dong worth of two-year bonds with a yield of 11 percent, its first success in raising funds from selling government debt after seven auctions since late February at which it found no buyers.

Banks, which often buy government bonds, have been struggling to raise dong funds after the central bank tightened monetary supply by raising interest rates and ordered banks to buy debt to rein in inflation that hit an annual rate of 27 percent in July.

The central bank aims to cap Vietnam's credit growth this year at 30 percent after a surge of 54 percent in 2007.

On Thursday, the Vietnam Development Bank raised only 129 billion dong by selling 15-year government bonds, about one-fifth of its targeted amount. The debt carries an annual yield of 15 percent.

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=16,494 dong) (Reporting by Ho Binh Minh; editing by Ben Tan)