Government places 3M UAH sovereign bonds at 7.3%

The Finance Ministry sold UAH 1.1 bln in UAH sovereign bonds yesterday in a primary auction. The bonds with the shortest maturity, due in October, attracted the highest demand: the government placed UAH 0.8 mln of these bonds with an average yield of 7.3%; UAH 0.3 bln of 3-year papers yielded 12.5%. Mykyta Mykhaylychenko: After raising UAH 0.9 bln last week, the government should have sufficient resources to repay UAH 0.8 bln in bonds maturing next Wednesday. We expect the yields to rise closer to September as the Finance Ministry plans to issue special VAT bonds (for up to UAH 16.4 bln) and bonds to buy grain for the state reserve fund (for UAH 5 bln) in August, while in September and October it will have to redeem UAH 2 bln and UAH 1.3 bln worth UAH sovereign bonds, respectively.