Ukraine keeps rates unchanged for local bonds

Ukraine’s Finance Ministry raised USD 20.1 mln and UAH
27 mln (a total of UAH 635 mln in the equivalent) at its weekly local bond
auction held on Sept. 25. It raised USD 4.0 mln and UAH 149 mln (a total of UAH
256 mln in the equivalent) at its auction last week.

The government kept unchanged its interest rates on
Sept. 25, selling 3M, 6M, 9M and 12M UAH-denominated bonds at the unified rate
of 18.5% and 9M and 2Y USD-denominated bonds at 5.95%. Demand for
UAH-denominated bonds was weak. The government satisfied all six bids for 6M,
9M and 12M UAH-denominated bonds (two bids for each of these bonds). Two out of
six bidders wanted to buy 3M hryvnia bonds at a higher interest rate, but the
government left them unsatisfied. The highest UAH receipts came from the sale
of 3M and 12M bonds – UAH 8.5 mln and UAH 11.7 mln respectively. The sale of 6M
and 9M bonds brought UAH 3.1 mln and UAH 3.4 mln, respectively.

The MinFin sold 9M local Eurobonds to eight out of
nine bidders for USD 10.8 mln, while all six bids for 2Y Eurobonds were
satisfied.

Evgeniya Akhtyrko:
Understanding that the government is not intending to hike interest rates for
local Eurobonds, bond buyers have given up on hoping for a better deal for them
and have somewhat boosted demand for FCY-denominated bonds.

Meanwhile, low demand for hryvnia bonds points to
possible problems with liquidity in the banking sector. With this low
availability of debt resources on the local market, the government’s need for
foreign borrowing intensifies.