MinFin receipts from local bonds drop to UAH 1 bln

Ukraine’s Finance Ministry raised UAH 1.3 bln at its
weekly bond auction on June 30 after raising UAH 6.2 bln at the auction
last week. The auction receipts came from the placement of 3M,
6M, 2Y and 3Y bonds.

Around 40% of auction receipts – UAH 534 mln – came
from the sale of 3M bonds to three bidders at 7.24% (the same rate for these
bonds as a week ago). In addition, two bidders bought 6M bonds for UAH 485 mln
at 7.74% (vs. 7.71% for these bonds last week).

MinFin satisfied five out of six bids for 2Y bonds for
UAH 247 mln with a weighted average interest rate of 10.39% (the same rate as a
week ago). On top of that, one bidder bought 3Y bonds for UAH 5 mln at 10.47%
(the same rate as a week ago).

Two bidders were ready to buy 1Y bonds at 10%, but
MinFin didn’t satisfy these bids. Recall, last week 1Y bonds were placed at
9.7%.

Evgeniya Akhtyrko: The results
of the latest local bond auction are sobering. They demonstrate that the
capacity of the local bond market is low, and market participants are not ready
to accept lower yields on UAH-denominated debt. This situation also means that
the government will have to resort to external borrowing and the placement of
local Eurobonds for financing the budget deficit.

The higher cost of local debt also questions the
feasibility of current government intentions to flood Ukraine’s economy with
affordable loans in order to stimulate economic growth.