Finance Ministry fails to place local bonds at auction

The Ministry of Finance did not place local government bonds at a primary auction yesterday. The government offered four series of bonds with 3M, 9M, 2Y and 5Y maturities. There were seven bids: two for 2Y papers and five for 5Y papers with maximum yields of 9.3% and 12.5%, respectively; and for a total of UAH 187.0 mln. The Ministry of Finance refused to fulfill the bids. Svetlana Rekrut: Yesterday’s auction showed low market demand for local government debt. We relate this to the limited appetite of Ukrainian banks, traditionally the primary buyers of local government bonds, who even though they might have sufficient liquidity, are restricted by internal holding limits on local government debt on their balance sheets and vice-versa.