MinFin raises UAH 6 bln from local bonds as interest rates drop again

Ukraine’s Finance Ministry raised UAH 6.2 bln at its
weekly bond auction on June 23 after raising UAH 2.0 bln
at the auction last week. The auction receipts came from the placement of 3M,
6M, 9M,1Y, 2Y and 3Y bonds.

More than half of auction receipts – UAH 3.9 bln –
came from the sale of 1Y bonds to eight out of nine bidders with a weighted
average interest rate of 9.7%. (vs. 10.9% for the same bonds two weeks ago).
The second largest receipts – UAH 1.1 bln – came from the sale of 2Y bonds to
11 out of 17 bidders with a weighted average interest rate of 10.39% (vs.
10.57% for the same bonds last week).

MinFin satisfied three out of five bids for 3M bonds
for UAH 533 mln at 7.24% (vs. 7.5% for the same bonds last week). In addition,
three out of four bidders were successful in buying 6M bonds for UAH 484 mln
with a weighted average interest rate of 7.71% (vs. 8.0% for these bonds last
week)

The rest of auction receipts came from the sale of 3Y
and 9M bonds. In particular, three out of five bidders were successful in
purchasing 3Y bonds for UAH 126 mln with a weighted average interest rate of
10.47% (vs. 10.76% for these bonds last week). On top of that, the government
received UAH 113 mln from the sale of 9M bonds to three out of four bidders at
9.5% (vs. 10.7% for these bonds two weeks ago).

Evgeniya Akhtyrko: It looks
like MinFin decided to tap market demand for bonds with longer terms of
maturity, slashing rates for 3M and 6M more intensively. This readiness of
market participants to buy bonds with longer terms of maturity points to lower
risk assessments and less uncertainty.

We expect MinFin to extend its bearish play and bring
interest rates for 2Y and 3Y bonds to the single digits very soon.