Ukraine MinFin raises UAH 106 mln from local bond placement

Ukraine’s Finance Ministry raised UAH 60.9 mln, USD
1.5 mln, and EUR 0.1 mln at its weekly bond auction on Dec. 4. The total
auction receipts reached 106.1 mln (in the equivalent), climbing from UAH 48.1 mln raised last week.

The highest auction receipts – UAH 52.3 mln – were
raised from the sale of 3M bonds to 11 bidders at 19.0%. The rest of
UAH-denominated auction receipts came from the sale of 6M bonds to six bidders
at 18.5%.

The government accepted five bids for 1Y
USD-denominated bonds for USD 0.667 mln at 7.25% while rejecting one bid at
8.25%. The rest of the USD auction receipts came from the sale of 6M bonds to
three bidders for USD 0.248 mln at 6.7%, and 2Y bonds to four bidders for USD
0.569 mln at 7.5%.

MinFin also satisfied two bids for 1Y euro-denominated
bonds for EUR 0.112 at 4.6% – the same rate as on Oct. 30 when this bond was
also offered.

Evgeniya Akhtyrko: The increased
political uncertainty related to martial law being imposed in selected regions
following Russia’s attack on Ukrainian navy ships
has hurt demand for local bonds. We expect the receipts at the nearest weekly
local bond auctions to recover, but not by much.

Given the expected underperformance of the
state budget on the revenue side, we see the
government will keep expenditures restrained through the year end to ensure the
budget deficit doesn’t exceed 2.5% of GDP, as required by the IMF. Fortunately
for the government, this means that MinFin will not need to intensify local
debt issues to finance the budget deficit.