MinFin raises UAH 1 bln from local bonds

Ukraine’s Finance Ministry raised UAH 1.0 bln at its
weekly bond auction on May 26 after raising UAH 21.2 bln (in the equivalent) at the auction last week.
The auction receipts came from the placement of 3M, 6M and 12M bonds. Interest
rates dropped for 3M and 6M bonds.

The largest UAH receipts – UAH 524 mln – came from the
sale of 3M
bonds to four out of seven bidders with a weighted average interest rate of
10.19% (vs. 10.50% for the same bonds at the auction last week). Seven out of
eight bidders were successful in purchasing 12M bonds for UAH 314 mln with a
weighted average interest rate of 10.97% (the same as the last week for these
bonds). The rest of auction receipts – UAH 199 mln – came from the sale of 6M
bonds to four out of five bidders with a weighted interest rate of 10.33% (vs.
10.78% for these bonds).

MinFin didn’t satisfy three bids for 9M bonds at
11.24%. A week ago, 9M bonds were placed at 11.0%.

Evgeniya Akhtyrko: The weak
demand for local bonds at the latest auction implies that MinFin is not likely
to succeed in further attempts to cut interest rates for local debt. And it’s
quite possible that it will have to raise interest rates amid increased needs
in budget deficit financing.

The current MinFin plan for local bond auctions in
June includes the weekly placements of 3M and 6M bonds. If the auction receipts
are insufficient for covering fiscal needs, the government is likely to add
local Eurobonds to the offer.