Ukraine raises UAH 3.7 bln from local bond sale

Ukraine’s Finance Ministry raised UAH 0.5 bln and USD
116.3 mln (a total of UAH 3.7 bln in the equivalent) at its weekly bond auction
on Feb. 19 after raising the equivalent of UAH 3.5 bln at the auction last week. The USD
auction receipts nearly tripled from USD 40.2 mln raised last week. The lion’s
share of USD auction receipts – USD 112.4 mln – came from the sale of one-month
bonds. They were bought by seven bidders at 6.25%. In addition, four bidders
bought 4M bonds for USD 1.7 mln at 6.25%. MinFin satisfied nine out of 14 bids
for 18M bonds at 7.25%, raising USD 2.2 mln.

Demand for UAH-denominated bonds was relatively weak,
and the government satisfied all bids. As with previous auctions, the bulk of
receipts came from the sale of bonds with the shortest term of maturity. In
particular, 21 bidders bought 3M bonds for UAH 444.2 mln at 19.5%. In addition,
seven bidders bought 6M bonds for UAH 73.6 mln at 19.0%, seven bidders bought
1Y bonds for UAH 11.0 mln at 18.5% and three bidders purchased 3Y bonds for UAH
7.3 mln at 17.25%.

Evgeniya Akhtyrko: The government is continuing its practice of attracting short-term
local debt in foreign currency. The increased demand for the short-term debt
reflects rising risks related to the upcoming elections. At the same time,
USD-denominated bonds have lower interest rates than UAH-denominated bonds. As
long as the UAH/USD exchange rate is stable, state expenditures on servicing
short-term USD-denominated bonds will be lower than servicing short-term
UAH-denominated bonds.