Ukraine raises UAH 9.2 bln from bond placements at falling rates

Ukraine’s Finance Ministry raised UAH 2.4 bln from the placement of two-year local bonds at a YTM of 17.3% on May 24. The yield was significantly lower than for the bond of about the same maturity placed on May 10 (17.9%) and April 19 (19.7%). On top of that, MinFin raised USD 271 mln from the placement of local USD-denominated bonds maturing in 1.5 years at a YTM of 7.52%. Its total proceeds from bond sales on May 24 amounted to UAH 9.2 bln.

Alexander Paraschiy: A visible decline in the yields of government bonds at their placements has been happening since early May after the central bank reduced its key rate to 19% from 22% on April 22, which resulted in a respective decrease in interest rates for two-week certificates of deposits. Yesterday’s placement of the UAH-denominated bond indicates MinFin is willing to continue lowering interest rates further. And the success of the two-year bond placement may indicate the market is ready to accept lower rates, possibly because some of the participants are expecting that the central bank’s board will lower its key rate again during its May 26 meeting. Alternatively, it could have been the state banks that purchased bonds at lower rates yesterday as employing state banks to lower rates was standard practice used by the government earlier.