Finance Ministry sells UAH 1.5 bln in sovereign bonds at average 10.8% yesterday

Ukraine’s Ministry of Finance held a planned primary auction of UAH sovereign bonds yesterday, attracting UAH 1.54 bln (USD 0.2 bln) at an average yield of 10.8%, up from 8.8% a week before.  Mykyta Mykhaylychenko: The shortest bonds continued to see the highest demand: the government placed UAH 580 mln (notional value) in 6M papers at 9.4% YTM, and UAH 701.5 mln in 11M papers at 11.1% YTM. The government also sold special 3Y Euro 2012 sovereign papers (which banks are allowed to use as part of their obligatory reserves against client deposits) for UAH 338 mln at a yield of 12.5%, which is typical for such issues. We expect yields to go up in the coming weeks as the Finance Ministry plans to start issuing special VAT bonds in August (for up to UAH 16.4 bln), while in September and October it will have to redeem UAH 2 bln and UAH 1.3 bln in UAH sovereign bonds, respectively.