Rates on short-term Ukraine local bonds crawl higher

Interest rates on 3M, 6M, 9M and 1Y local bonds placed
at the Ukrainian Finance Ministry’s  auction on March 13 slightly increased
from last week as bidders expected MinFin would impose the same cut-off mark.
Auction receipts slid to UAH 1.1 bln from UAH 1.2 bln in the prior week. Demand
shifted to 3M bonds from 9M and 1Y bonds, which had brought in more than half
of last week’s auction receipts.

The placement of 3M bonds raised UAH 481 mln while the
interest rate inched up to 17.44% from 17.43% last week. The interest rates for
6M, 9M and 1Y bonds merged to 17.00% (vs. 16.92% for 6M bonds, 16.99% for 9M
bonds and 16.93% 1Y bonds last week). The government satisfied two out of three
bids for 2Y bonds at 16.10% (vs. 16.13% last week) for UAH 270 mln.

Evgeniya Akhtyrko: The upward adjustment of interest rates on the primary market is in
line with our expectations. Last week’s significant rise in interest rates –
prompted by a hike in the key policy rate on March 1 – did not produce higher
demand for local debt securities as the receipts of the last four weekly
auctions have stagnated around the same level of UAH 1 bln. That said, we do
not see any reason to expect significant movements in interest rates on the
primary market in the near future.