MinFin raises UAH 4 bln at local bond auction, hikes interest rates again

Ukraine’s Finance Ministry raised UAH 4.4 bln at its
weekly bond auction on Nov. 23 after raising UAH 8.4 bln last week. MinFin
satisfied all bids for 3M, 6M, 1Y, 1.5Y, 2Y, and 3Y bonds. Meanwhile, none of
eight bids for 5Y bonds with the demanded interest rate of 13.0% were
satisfied.

Three quarters of all auction receipts, or UAH 3.3
bln, came from the sale of 6M bonds to four bidders with a weighted average
interest rate of 10.55% (vs. 10.50% a week ago). The second largest amount, at
UAH 709 mln, came from the sale of 3Y bonds to 12 bidders with a weighted
average interest rate of 12.85% (vs. 12.70% last week). In addition, 18 bidders
bought 1Y bonds for UAH 177 mln with a weighted average interest rate of 11.64%
(vs. 11.55% last week). Five bidders paid a total of UAH 150 mln for 3M bonds
with an interest rate of 10.00%.

The interest rates for 1.5Y and 2Y bonds didn’t change
from the previous week. MinFin sold 2Y bonds to 12 bidders for UAH 66 mln at
12.47%. The least receipts, of UAH 25 mln, came from the sale of 1.5Y bonds to
four bidders at 11.57%.

Evgeniya Akhtyrko: The auction
receipts at the latest auction were very weak given the hike of interest rates
for most of the bonds. Weak demand amid higher interest rates as well as the
shift of demand to short-term bonds is likely to be the reaction of the market
to the increased risk of Russia’s military aggression.

Next week, MinFin is to offer six types of UAH
denominated bonds with maturity ranging from six months to six years. We expect
that the demand for the new government debt will be low.