MinFin raises UAH 6.0 bln from local bonds, lowers interest rates

Ukraine’s Finance Ministry raised UAH 6.0 bln at its
weekly bond auction on July 9 after raising UAH 8.0 bln at the auction last week. MinFin
placed five types of UAH-denominated bonds with maturities ranging from four
months to six years.

Around the half of the auction receipts – UAH 2.9 bln
– came from the sale of 6Y bonds to 17 bidders with a weighted average interest
rate of 15.84% (vs. 15.85% two weeks ago). MinFin also satisfied 13 out of 17
bids for 3Y bonds for UAH 1.2 bln with a weighted average interest rate of
16.75% (vs. 16.93% last week). In addition, 27 out of 48 bidders were
successful in buying 1Y bonds for UAH 1.0 bln with a weighted average interest
rate of 17.99% (vs. 18.23% last week).

The rest of the bond auction receipts came from the
sale of 4M and 7M bonds. The interest rate for 4M bonds decreased to 17.24%
from 17.44% last week. The government satisfied eight out of 11 bids for 4M
bonds, raising UAH 0.5 bln. The other UAH 0.5 bln came from the sale of 7M
bonds to ten out of 22 bidders with a weighted average interest rate of 17.47%
(vs. 17.91% last week).

Evgeniya Akhtyrko: The risks of the Ukrainian local bond market are declining. The
interest of market participants in UAH-denominated bonds remains high despite
the further decline of interest rates. It looks like there is a market urge for
the National Bank of Ukraine to lower the key policy rate from its current
17.5%.