Ukraine raises UAH 1.1 bln from local bonds, cuts interest rates

Ukraine’s Finance Ministry raised UAH 1.1 bln at its
weekly bond auction on Oct. 15 after drawing UAH 2.2 bln at the auction
last week. MinFin offered 3M, 1Y and 2Y UAH-denominated bonds.

Around 90% of auction’s receipts came from the sale of
3M and 1Y bonds. In particular, nine out of 11 bidders acquired 3M bonds for
UAH 520 mln at 15.35% (vs. 15.75% for the same bonds two weeks ago). In
addition, MinFin satisfied all 11 bids for 1Y bonds for UAH 513 mln at a
weighted average interest rate of 14.93% (vs. 15.09% for the same bonds last
week). On top of that, five auction participants bought 2Y bonds for UAH 116
mln at 15.10%.

Evgeniya Akhtyrko: The
situation at the primary bond market remains bumpy. The drop in auction
receipts indicates that the interest of non-residents investors in buying
Ukraine’s local debt was minimal.

Nevertheless, MinFin continued with cutting interest
rates for 3M and 1Y bonds. This means that local market participants are able
to satisfy the current government needs in financing the budget deficit at the
moment. If the interest of non-resident investors in Ukraine’s local debt isn’t
restored, the market demand is likely to shift to short-term bonds.