Ukraine raises UAH 0.3 bln from selling local bonds

Ukraine’s Finance Ministry raised USD 4.0 mln and UAH
142.8 mln (a total of UAH 255.6 mln in the equivalent) at its weekly local bond
auction held on Sept. 18. It raised USD 10.3 mln and UAH 134.6 mln (a total of
UAH 425.8 mln in the equivalent) at the auction held last week.

The government kept unchanged its interest rates,
selling 3M, 6M and 12M UAH-denominated bonds at the unified rate of 18.5% and
9M and 12M USD-denominated bonds at 5.95%. Three-quarters of UAH receipts – or
UAH 108.8 mln – came from the sale of 3M bonds to five bidders. Seven other
bidders were ready to buy 3M bonds at higher interest rates (20.5% maximum),
but the government left those bids unsatisfied. MinFin satisfied all six bids
for 6M and all four bids for 12M bonds. The respective receipts amounted to UAH
29.2 mln and UAH 4.8 mln.

The demand for local Eurobonds was low. The government
sold 9M local Eurobonds to six bidders for USD 1.9 mln and 12M local Eurobonds
to nine bidders for USD 2.1 mln. Two bids for 9M bonds and one bid for 12M
bonds were left unsatisfied.

Evgeniya Akhtyrko: The demand
for FCY-denominated local debt turned out to be even lower than in previous
September auctions. Everything points to low local market capacity to buy local
Eurobonds, and the increase of interest rates is not likely to improve the
situation substantially. At the moment, September receipts from the sale of
local Eurobonds total USD 26.9 mln, which is not enough even to cover
government FCY outlays for the redemption of local Eurobonds for USD 100 mln
this month. Besides, the government needs to pay USD 554 mln on international
sovereign Eurobond coupons.

That said, we are likely to see a plunge in gross
foreign reserves in September, followed by the loss of USD 0.52 bln in August.