23 December 2011
Ukraine’s Finance Ministry raised UAH 1.3 bln (USD 158 mln) in standard 6-month local bonds, accepting two bids yesterday with yields at 9.75%. At the same time, demand for local USD-denominated bonds shrank to virtually nothing and the Finance Ministry sold just USD 9.1 mln of the bonds (yields ranging from 9.0% for 6-month papers to 9.3% for one-year papers). Vitaliy Vavryshchuk: Given the large sizes of accepted bids for UAH bonds, we believe they came from state-owned banks. The low demand for USD-denominated bonds is disappointing. Following the first auction on Dec. 9 (USD 227 mln raised), the government expected strong interest to persist at least for another couple of weeks. Given the FX liquidity of local banks remains at a reasonable level, we think banks are reluctant to buy USD-bonds in anticipation of further rate increases with the Finance Ministry’s acute need for cash apparent.