MinFin raises UAH 13 bln at the local bond auctions, hikes interest rates again

Ukraine’s Finance Ministry raised UAH 11.0 bln and EUR
56 mln (the total equivalent of UAH 12.7 bln) at its weekly bond auction on
Nov. 30 after raising UAH 4.4 bln last week. MinFin satisfied all bids for 6M,
1Y, 1.5Y, 2Y, 3Y and 6Y UAH denominated bonds as well as 6M EUR denominated
bonds.

Around two-thirds of all auction receipts – UAH 8.3
bln – came from the sale of 6M local currency bonds to 11 bidders at 10.70%
(vs. 10.55% last week). Five bidders bought 1.5Y bonds for UAH 1.1 bln at
11.65% (vs. 11.57% last week). In addition, 11 bidders bought 2Y bonds for UAH
1.1 bln at 12.55% (vs. 12.47% last week).

MinFin raised UAH 327 mln from the sale of 3Y bonds to
nine bidders at 12.85% (the same rate as last week). In addition, 11 bidders
bought 1Y bonds for UAH 93 mln at 11.65% (vs. 11.64% last week). The least
auction receipts, UAH 87 mln, came from the sale of 6Y bonds to 14 bidders at
13.25%.

EUR denominated bonds were sold to six bidders at
2.35%.

Evgeniya Akhtyrko: Despite the
increased auction receipts, the situation at the local bond market looks quite
desperate. The bids were not numerous and all of them were satisfied. This
means that the results of the auctions were predetermined, and the MinFin had
to make additional efforts to collect the participants for the latest auction
while luring them by higher interest rates. The placement of 6M local Eurobonds
was also a surprise as the sale of these bonds was not in the initial schedule.

It’s also worth mentioning that the UAH receipts of
the latest auction are close to the government needs for redeeming local bonds
for UAH 11.9 bln on Dec. 1. This means that the auction receipts are just used
for repaying the older debts but not for financing the budget deficit.

Apparently, the increased risks of Russia’s military
aggression
coupled with the reckless statements of the President Zelensky on an ostensibly contemplated coup
d’etat added more
vulnerability to the already shaky Ukraine’s investment environment. We don’t
expect the situation at the local market to improve in the next few weeks, and
any sensible auction receipts will be possible if MinFin continues with
“persuading” the market participants to help.