Ukraine MinFin hikes interest rates for local bonds

Ukraine’s Finance Ministry raised UAH 5.6 bln and USD
82 mln (UAH 7.9 bln in the equivalent) at its weekly bond auction on Nov. 10,
compared to UAH 2.0 bln at the auction last week.
The auction receipts came from the placement of 3M and 1Y UAH-denominated
bonds, as well as 15M USD-denominated bonds.

More than half of auction receipts – UAH 5.3 bln – came
from the sale of 3M bonds to three bidders at 9.0% rate (vs. 7.5% a week ago). In
addition, MinFin satisfied ten out of 15 bids for 1Y bonds for UAH 281 mln with
a weighted average rate of 10.42% (vs. 10.30% two weeks ago). At the same time,
MinFin didn’t satisfy five bids for 2Y bonds at 11.5%.

MinFin sold USD-denominated bonds to 35 out of 36
bidders for USD 82.3 mln with a weighted average interest rate of 3.62%.

Evgeniya Akhtyrko:  A
significant increase of interest rates for 3M bonds helped to raise more
auction receipts. However, the limited number of bidders for these bonds
implies that most of the UAH receipts at the auction are still being generated
by state-owned banks.

As previously, local Eurobonds are finding wider
demand at the market than UAH-denominated bonds. However, the receipts from
USD-denominated bonds were quite moderate at the latest auction.

We don’t expect the number of bidders for
short-term UAH-denominated bonds to increase, even amid quite high interest
rates. The volume of receipts is likely to be at UAH 5-8 bln on the next weekly
auctions.