UAH sovereign S-T yields stay within 6%-8% at a primary auction

At a primary sovereign bond auction yesterday, Ukraine’s Finance Ministry attracted UAH 370.4 mln (USD 46.6 mln) in UAH bonds, 27% less than at last week’s auction. All the proceeds were raised through the placement of short-term papers. Mykyta Mykhaylychenko: Although overall demand was 74% up from the last week’s auction, the government satisfied only bids with the lowest yields as it has now enough liquidity to fund its current expenses, allowing total placement volumes to decline. 6M papers were placed at 6.75% (UAH 160 mln of par value was placed) – a marginal increase from 6.43% two weeks ago. The 10M yield was at 8% (UAH 230 mln of par value was placed), also marking an insignificant increase from 7.84% for the same papers two weeks before. At the same time, the Finance Ministry did not satisfy any bids for 2.5-year papers, which fell in the range of 11%-12.4% YTM. We expect the government to continue tapping the market regularly, keeping interest rates at low levels as it has enough cash to fund all its needs for the near future.