Local bonds placement raises UAH 1.2 bln amid lower demand

Ukraine’s Finance Ministry sold 3M, 6M, 12M and 36M
UAH-denominated bonds at a total amount of UAH 1.2 bln at an auction held on Feb.
20. The total number of bids declined to 26 from 60 at the auction held one
week ago when UAH 1.5 bln was raised. MinFin did not satisfy two bids for 9M
bonds as the bidders’ interest rates of 16.90% and 16.75% exceeded the prior
week’s cut off of 16.50%.

The shortest 3M and 6M bonds, which remain the most
popular among bidders, brought in almost three-fourths of total auction
receipts, or UAH 0.9 bln. The interest rate for 6M bonds increased to 16.37%
from 16.24% one week ago. The interest rate for one-year bonds inched down to
16.39% from 16.40% one week ago. Only one out of four bids for three-year bonds
was accepted with the rate of 15.79%, compared to 15.70% formed at an auction
one month ago when the bonds of such maturity were last placed.

Evgeniya Akhtyrko: The few market participants this week came to the auction with a clear
picture that MinFin is not likely to agree on hiking interest rates
significantly from the previous auction. At the same time, the central bank
meeting to decide upon the revision of the key policy rate is approaching
(March 1) and bondholders could be expecting interest rates to rise. Recall,
the National Bank of Ukraine hiked the key policy rate by 1.5pp to 16.0% on Jan. 25.