MinFin raises UAH 1.1 bln at local bond auction

Ukraine’s Finance Ministry raised UAH 1.1 bln at its
weekly bond auction on April 6, which was the smallest amount attracted since
November 2020. The auction receipts came from the placement of 3M, 12M, 20M and
2Y and 3Y bonds.

Almost half of receipts – UAH 532 mln – came from the
sale of 3-month bonds to 9 out of 14 bidders with a weighted average rate of
7.77% (vs. 7.98% for these bonds a week ago). The rates on such bonds were the
lowest since November. MinFin satisfied almost all the bids for other bonds,
with interest rates remaining the same as at the previous placements of such
bonds one or two weeks ago (10.75% for 1Y bonds, 11.1% for 20M, 11.8% for 2Y
and 12.05% for 3Y).

Alexander Paraschiy:  A
sharp decline in demand for local bonds is likely rooted in the increased
quarantine measures in Kyiv which naturally slowed business activity in the
capital. It does not threaten MinFin’s liquidity taking into account that this
week there are no maturities of UAH bonds and non-debt proceeds to the budget
look solid.

Next week, the government is going to offer nearly the
same set of bonds as well as dollar bonds maturing in 2 years. We expect the
same weak demand for local currency bonds next week and some good demand for
dollar bonds which comes from the increased dollar liquidity of state banks as
soon as MinFin redeems USD 366 mln of notes by the end of this week.