Local bond placement receipts surge nearly sixfold

The Ukrainian Finance Ministry’s weekly local bond
placement held on March 20 raised UAH 6.4 bln, nearly sixfold after UAH 1.1 bln
was attracted last week. The placement of two-year euro-denominated bonds for
EUR 123.3 mln brought in around 60% of all auction receipts.

The interest rate for UAH-denominated 3M, 6M, 9M and
2Y bonds did not change from last week’s auction. The receipts from the
placement of 3M (17.44%), 6M (17.00%) and 9M (17.01%) bonds amounted to UAH 2.2
bln, while the last week’s placement of bonds with such maturity brought only
UAH 0.58 bln.

Meanwhile, the demand for 2Y and 3Y UAH-denominated
bonds was weak. Receipts from 2Y bonds, placed at 16.10%, amounted to UAH 2.5
mln. The government satisfied five out of six bids for 3Y bonds with a weighted
average interest rate of 16.15% (vs. 16.07% two weeks ago) for UAH 173 mln.

The government, hungry for foreign currency, satisfied
all seven bids for 2Y euro-denominated bonds, landing with a weighted average
interest rate of 4.12%, which is higher than 3.95% – the rate yielded on the
last placement of comparable bonds on Dec. 26.

Evgeniya Akhtyrko: The auction
results indicate a significant revival on the primary bond market after a dull
picture from the five previous weekly auctions with receipts of UAH 1.0-1.5 bln
each. Nevertheless, bidders remain risk averse, preferring UAH-denominated
bonds with maturity of up to one year and FCY-denominated bonds (when offered).

The government had to agree to higher interest
rates on local Eurobonds given the high foreign currency payments during March. Notably, MinFin had updated its March auction
schedule, adding one more local Eurobond placement on March 20, while the
initial plan entailed only one placement of two-year Eurobonds on March 27.