MinFin local bond auction receipts jump to UAH 12 bln

Ukraine’s Finance Ministry raised UAH 12.3 bln at its
weekly bond auction on Jan. 19 after raising UAH 8.9 bln (in the equivalent) at
the auction last week. The auction receipts came from the placement of 3M, 1Y,
2Y, 3Y and 6Y bonds.

Around half of auction receipts – UAH 6.1 bln – came
from the sale of 1Y bonds to 38 out of 42 bidders with a weighted average
interest rate of 11.73% (vs. 11.69% for 1Y bonds last week). The second-largest
receipts – UAH 4.0 bln – were bought by 15 out of 16 bidders from the purchase
of 2Y bonds with a weighted average interest rate of 11.94% (11.85% for 2Y
bonds last week). In addition, MinFin satisfied 19 out of 20 bids for 6Y bonds
for UAH 1.2 bln with a weighted average interest rate of 12.49%.

The sale of 3Y bonds to 13 out of 15 bidders at 12.49%
(vs. 12.15% for 6Y bonds two weeks ago) brought in UAH 578 mln. The lowest
receipts – UAH 490 mln – came from the sale of 3M bonds to 22 out of 31 bidders
with a weighted average interest rate of 9.18% (vs. 10.0% for 3M bonds two
weeks ago).

Evgeniya Akhtyrko: Auction
receipts increased after MinFin hiked interest rates for all offered bonds
except for the 3M ones. In this way, the government apparently is trying to
shift the demand of market players for the bonds maturing after 2021 in order
to avoid the swelling of the financial burden from redeeming local debt during
the current year. The quite high demand for 6Y bonds is also a positive
development.

Next week, MinFin plans to offer four types of
UAH-denominated bonds with maturity ranging from six months to three years. The
auction’s results should demonstrate whether or not the MinFin is able to
achieve sustainable demand for Ukraine’s local debt at current interest rates.