MinFin raises UAH 1.6 bln at local bond auction

Ukraine’s Finance Ministry raised UAH 216 mln and USD
49.2 mln (total equivalent of UAH 1.6 bln) at its weekly bond auction on April
13 after raising UAH 1.1 bln at the auction last weel. The auction receipts
came from the placement of 6M, 12M, 20M UAH denominated bonds and 2Y USD bonds.

The lion’s share of auction receipts was ensured by
the sale of USD-denominated bonds to 48 out of 50 bidders at 3.9% (the same
interest rates as for comparable bonds placed two weeks ago).

The government satisfied all bids for UAH denominated
bonds. In particular, six bidders bought 6M bonds UAH 139 mln with a weighted
average interest rate of 8.07% (vs. 8.59% for these bonds placed three weeks
ago). In addition, three bidders purchased 12M bonds for UAH 72 mln at 10.75%
(the same interest rate for these bonds as a week ago). The rest of the UAH
receipts – UAH 6 mln – came from the  sale of 20M bonds to four bidders at
11.10% (the same interest rate for these bonds as a week ago).

Evgeniya Akhtyrko:  The
UAH auction receipts plummeted to a practically negligible amount amid increased risks of military aggression
on the east of Ukraine. Apparently, MinFin views this situation as temporary,
as it didn’t resort to hiking interest rates for attracting more bidders for
UAH denominated bonds. Lacking the resources for financing the budget gap, the
government had no other option than to restrain budget expenditures for the
short term.

MinFin’s action plan for the next week includes the
placement of six types of UAH denominated bonds with maturity ranging from
three months to six years. However, the government might add local Eurobonds to
the offer, as demand for UAH denominated bonds is not likely to rise.