Government raises USD 0.5 bln in t-bills, VTB spurs demand

Ukraine’s Finance Ministry raised USD 535 mln via a primary auction in USD-denominated treasury bills yesterday, a record amount since the FX-denominated notes were introduced in mid-December of last year. The bulk of demand was concentrated in one-year notes (USD 235 mln), while the rest was equally split between two and three-year notes (USD 150 mln each). Yields were set at 9.3% for one and two-year notes and 9.45% for three-year notes. VTB was the key buyer of t-bills yesterday, according to business daily Kommersant, as the deal was part of Ukraine’s USD 2.0 bln VTB loan repackaging. According to earlier media reports, VTB agreed to rollover USD 1.0 bln of the USD 2.0 bln loan via the purchase of domestic FX-denominated t-bills, while USD 0.5 bln will be refinanced with a new loan and USD 0.5 bln will be eventually repaid.

Vitaliy Vavryshchuk: The fact that that half of the volume raised yesterday was one-year money is a bit discouraging and implies the repackaging will insignificantly ease Ukraine’s near-term debt servicing burden. We expect new t-bill auctions this week or next, with VTB bringing its purchases to USD 1.0 bln. Full terms of the USD 2.0 bln loan restructuring should also be made public in the coming weeks.