Government Sneaks In Another Bond Auction Before New Year

On December 21, the Finance Ministry sold three-year bonds with a 6% yield for USD 215 ths in local currency at its bond auction. Since the start of the year the government has sold about USD 315 mln in local bonds at its auctions. Oleksandr Klymchuk: We are not so surprised by the tiny amount of the issue (which has been quite common this year), but the stop-yields of the last auction are really amazing: 7% for two-year notes, 6% for three-year and 7% for five-year securities. As these yields are well bellow ask-yields on the PFTS secondary market, and the Finance Ministry is unlikely believe in a New Year’s miracle, we suppose that these bonds were taken by government related institutions. The next auction is scheduled to be held on December, 25; if the stop-yields are not raised to at least previous level (2y: 9%; 3y: 9,4%; 5y: 9,5%), we don’t expect that government securities will be bought by investors, save government related institutions again.