Ukraine raises UAH 1.6 bln from local bonds

Ukraine’s Finance Ministry raised UAH 1.6 bln at its
weekly bond auction on Feb. 25 after drawing UAH 1.5 bln at the auction
last week. The auction receipts came from the placement of 3M,
17M, 2Y and 7Y bonds.

The highest auction receipts – UAH 657 mln – came from
the sale of 2Y bonds to two out of seven bidders at 10.0% (the same rate as two
weeks ago for the same bonds). The second highest receipts – UAH 476 mln – were
by the sale of 17M bonds to two out of five bidders with a weighted average
interest rate of 9.90% (vs. 9.63% for the same bonds last week).

In addition, MinFin satisfied three out of seven bids
for 7Y bonds for UAH 229 mln at 9.95% (vs. 9.79% for the same bonds a month
ago). On top of that, five out of eight bidders were successful in buying UAH 209 mln in 3M
bonds at 9.40% (vs. 9.46% for the same bonds two weeks ago).

Evgeniya Akhtyrko: The results
of the latest auction are very similar to those of the auction a week ago. It
looks like that in the absence of nonresident investors, the receipts from the
weekly placement of UAH-denominated bonds are not likely to exceed UAH 2 bln.

The demand for 2Y and 7Y bonds was likely generated by
Ukrainian state-owned banks. The receipts from the sale of 7Y bonds were not
stellar, but the continued interest in long-term bonds is a positive
development.

The movements in interest rates were not consistent.
The interest rates for 17M and 7Y bonds inched up, while the yields of the
short-term 3M bonds continue to decline. It looks like 1Y and 2Y bonds will be
in the highest demand among the participants of the Ukrainian local bond
market. Should the government’s need for budget debt financing increase, MinFin
is likely to offer local Eurobonds to auction participants.