MinFin raises UAH 1.9 bln from local bonds, lowers interest rates

Ukraine’s Finance
Ministry raised UAH 1.9 bln at its weekly bond auction on Sept. 1 after raising UAH 1.8 bln at the
auction last week.
MinFin offered 3M, 1Y and 3Y bonds. Interest rates declined for all placed
bonds.

Around 60% of
auction receipts – UAH 1.2 bln – came from the sale 3Y bonds, which were sold
to 21 out of 34 bidders at 16.0% (vs. 16.12% for the same bond two weeks ago).
The 1Y bonds were sold to 11 out of 18 bidders for UAH 363 mln at 15.95% (vs.
16.0% for the same bond a week ago). On top of that, MinFin satisfied all ten
bids for 3M bonds for UAH 316 mln with a weighted average interest rate of
16.24% (vs. 16.49% two weeks ago).

Evgeniya Akhtyrko: The interest rates for local bonds continue to decline, while government needs in attracting new debt
are moderate. A revision of the key policy by the National Bank of Ukraine is
scheduled for Sept. 5. Overall, the market is ready for a rate cut of 0.5-1.0pp
from the current 17%.

Next week, we are
likely to see a rise in receipts from the placement of local bonds, as MinFin
plans to offer 18M and 24M USD-denominated bonds in addition to 6M, 1Y and 2Y
UAH-denominated bonds. The downward trend in interest rates is likely to
continue.