Ukraine raises EUR 84 mln from local Eurobond placement

The Ukrainian Finance Ministry sold EUR-denominated
local bonds maturing in November 2019 to three bidders for EUR 83.6 mln at 4.0%
interest at the weekly bond auction held on Apr. 24. MinFin also placed 6M, 1Y
and 5Y UAH-denominated bonds at a total amount of UAH 1.1 bln, bringing total auction
receipts to UAH 3.7 bln (in equivalent).

Five-year bonds were in highest demand among
UAH-denominated securities offered at the auction. The government satisfied
seven out 13 bids for UAH 646 mln at a weighted average interest rate of
15.97%. It rose from the 15.79% rate yielded at the previous placement of 5Y
bonds on Feb. 27, which occurred before the central bank last hiked its key policy rate on March 1.

Six auction participants bought 6M bonds for UAH 333
mln at 17.20% interest (up from 17.13% at the prior week’s placement). The rest
of the auction receipts – worth UAH 72 mln – were acquired by five bidders who
bought 1Y bonds at 16.99% interest (up from 16.95% on Apr. 10).

Evgeniya Akhtyrko: The
placement of EUR-denominated bonds was not mentioned in MinFin’s initial
auction schedule for 2Q18. It mentioned only the sale of UAH-denominated bonds,
while the next placement of FCY-denominated bonds had been scheduled only for
June 12.

Apparently, the FCY receipts will help support gross
international reserves, but no immediate need for these funds is apparent as no
repayment on local Eurobonds is expected until June.

The higher demand for long-term bonds is a positive
development, while the UAH yield curve on the local market remains inverted.