The Hanoi stock market said just one bidder sought to buy 50 billion dong of three-year bonds at 10.2 percent as part of a 300 billion dong offering but the issuer was only prepared to accept a yield of 9.3 percent or lower.

No bidders came forward for the firm's 200 billion dong in two-year debt, the exchange said in a statement.

The state-run highway builder wanted to raise money to fund the construction of a highway linking Hanoi and the northern province of Lao Cai bordering China.

Its failure to sell bonds adds to the pressure on the state budget after the Treasury repeatedly failed to raise funds through government bonds this year.

The bond auction results came after Fitch Ratings downgraded Vietnam's local currency sovereign rating to BB-minus from BB on Tuesday, blaming sustained fiscal decline and structural weaknesses in the economy.

Reuters - July 2, 2009