MinFin raises UAH 11 bln at the local bond auctions, hikes interest rates again

Ukraine’s Finance Ministry raised UAH 5.8 bln, EUR 102
mln and USD 69 mln (the total equivalent of UAH 10.8 bln) at its weekly bond
auction on Dec. 14 after raising UAH 8.4 bln, USD 261 mln and EUR 25 mln (the
total equivalent of UAH 16.7 bln) at the auction last week. The auction
receipts came from the sale of 3M, 6M, 1Y, 1.5Y, 2Y, 3Y and 5Y UAH denominated
bonds, 1Y EUR bonds as well as 2Y USD bonds. MinFin hiked the interest rate for
most UAH denominated bonds.

The largest UAH receipts – UAH 2.2 bln – came from the
sale of 3M bonds to five bidders at 10.50%.  MinFin satisfied 11 out of 12
bids for 6M bonds for UAH 1.5 bln at 10.75% (vs. 10.70% last week). In
addition, 18 out of 19 bidders were successful in purchasing 2Y bonds for UAH
1.4 bln at 12.65% (vs. 12.64% last week).

MinFin raised UAH 488 mln from the sale of 1Y bonds to
18 bidders with a weighted average interest rate of 11.77% (vs. 11.70% last
week). Seven bidders purchased 1.5Y bonds for UAH 129 mln with a weighted
average interest rate of 11.88% (vs. 11.79% last week). In addition, MinFin
satisfied eight out of nine bids for 3Y bonds for UAH 110 mln at 12.85% (the
same rate as last week). The least auction receipts, UAH 13 mln, came from the
sale of 5Y bonds to nine bidders at 13.00% (vs. 12.75% four weeks ago).

MinFin satisfied all bids for local Eurobonds. In
particular, six bidders bought EUR denominated bonds at 2.50% and 31
participants bought USD denominated bonds at 3.90%.

Evgeniya Akhtyrko: The
government has been hiking the interest rates for UAH denominated bonds for
three weeks in a row. And this means that the market participants continue to
assess domestic risks as high. More than half of UAH receipts at the latest
auctions came from 3M and 6M bonds. In addition, local Eurobonds brought half
of all auction receipts.

Next week, MinFin is to offer six types of UAH
denominated bonds with maturity ranging from three months to six years, as well
as 1Y USD denominated bonds. Another hike of interest rates for UAH denominated
bonds is possible, as the government’s needs for budget financing are highest
at the end of the fiscal year.