MinFin local bond auction receipts drop to UAH 3 bln

Ukraine’s Finance Ministry raised UAH 1.4 bln and USD
65 mln (the total equivalent of UAH 3.1 bln) at its weekly bond auction on July
27 after raising UAH 7.5 bln and EUR 8 mln at the auction a week ago. The
auction receipts came from the placement of 1Y, 1.5Y, 2Y, 3Y and 6Y UAH
denominated bonds as well as 1Y USD bonds. MinFin hiked the interest rate for
1Y UAH bonds by 16 bps, while the interest rate of 3Y bonds slid 3 bps.

The sale of USD denominated bonds brought more than
half of all auction receipts. MinFin satisfied all 54 bids at 3.70%.

More than half of UAH auction receipts – UAH 918 mln –
came from the sale of 1Y bonds with a weighted average interest rate of 11.15%
(vs. 10.99% for 1Y bonds a week ago). MinFin satisfied 23 bids leaving out one
bid at 12.00%. The sale of 18M bonds to all 12 bidders at 11.30% brought UAH
296 mln. Eight out of ten bidders were successful in purchasing 2Y bonds at
12.09% for UAH 71 mln.

The sale of 6Y bonds went to all eight bidders at
12.75% brought UAH 70 mln. On top of that, MinFin satisfied 11 bids for 3Y
bonds for UAH 13 mln with a weighted average interest rate of 12.27% (vs.
12.30% for these bonds last week).

Evgeniya Akhtyrko: After
raising USD 500 mln from the international Eurobond placement on
July 22, MinFin covered the immediate needs in budget gap
financing. Therefore, the weak result of the latest local bond auction is not
much of a problem. However, quite weak receipts from 1Y bonds amid hiked
interest rates means that the capacity of the local bond market players is very
low. And the subsequent needs in covering the budget gaps will definitely call
for external help.

Next week, MinFin is to offer six types of UAH
denominated bonds with maturity ranging from one to five years. Though already
flimsy, Ukraine’s local bond market is entering the summer-end low season. We
are not likely to see any impressive local bond market activity in August.