MinFin raises UAH 8.0 bln from local curency bonds

Ukraine’s Finance Ministry raised UAH 8.0 bln at its
weekly bond auction on July 2 after raising UAH 7.5 bln (in the equivalent) at the auction last week. MinFin
placed six types of UAH-denominated bonds with maturity ranging from four
months to three years.

The highest auction receipts – UAH 2.5 bln – came from
the sale of 2Y bonds to 23 bidders with a weighted average interest rate of
17.94% (vs. 17.95% two weeks ago). The MinFin also satisfied 21 out of 33 bids
for 1Y bonds for UAH 2.1 bln with a weighted average interest rate of 18.23%
(vs. 18.33% last week). Five out of seven bidders were successful in buying 16M
bonds for UAH 1.4 bln with a weighted average interest rate of 17.98%. The
interest rate for 3Y bonds didn’t change from the last week, staying at 16.93%.
These bonds were sold to 11 out of 12 bidders for UAH 1.1 bln.

The rest of bond auction receipts came from the sale
of 4M and 7M bonds. The interest rate for 4M bonds decreased to 17.44% from
17.50% last week. The government satisfied only three out of 12 bids for 4M
bonds, raising UAH 0.5 bln. The other UAH 0.5 bln came from the sale of 7M
bonds to 11 out of 25 bidders with a weighted average interest rate of 17.91%.

Evgeniya Akhtyrko: This is the
first bond auction since the beginning of the year in which the government
didn’t place local bonds denominated in a foreign currency. For July, MinFin
plans only one placement of local Eurobonds. Apparently, the placement of international Eurobonds in June
eased pressure on MinFin to rollover the redeemed local Eurobonds in order to
avoid a plunge in gross international reserves.

The interest of market participants in
UAH-denominated bonds remains high. MinFin has been successful in shifting demand
to bonds with longer terms of maturity. However, MinFin is also 
restrained from pursuing a more active decrease in interest rates as long as
the key policy rate of the central bank is 17.5%.