Ukraine raises UAH 5.3 bln from local bonds

Ukraine’s Finance Ministry raised USD 0.2 bln and UAH
0.5 bln (UAH 5.3 bln in the equivalent) at its weekly bond auction on Dec. 24
after drawing the equivalent of UAH 11.4 at the auction last week.
The auction receipts came from the placement of 10M and 3Y USD-denominated
bonds, as well as 6M and 2.5Y UAH-denominated bonds.

The highest auction receipts – USD 105 mln – came from
the sale of 10M USD-denominated bonds to five out of 17 bidders with a weighted
average interest rate of 3.40%. In addition, MinFin satisfied 11 out of 18 bids
for 2Y bonds for USD 100 mln with a weighted average interest rate of 3.86%
(vs. 4.08% for the same bonds three weeks ago).

MinFin satisfied five out of nine bids for the
purchase of 6M UAH-denominated bonds for UAH 511 mln with a weighted average
interest rate of 11.75%. In addition, two out of seven bidders were successful
in buying 3Y bonds for UAH 11 mln at 11% (vs. 11.1% last week).

Evgeniya Akhtyrko: 
Apparently, the last auction of 2019 occurred with minimal or no participation
of non-resident investors, who have been the most active buyers of
UAH-denominated bonds with terms of maturity exceeding three years in recent
months. Therefore, the results of the latest auction offer insight into the
capacity and preference of market participants in the absence of foreign
investors.

Meanwhile, the plunge in interest rates for local
Eurobonds – amid a relatively high volume of purchases – implies that Ukrainian
bidders (mostly commercial banks) have excessive liquidity in foreign currency,
just as their demand for UAH-denominated bonds (especially for the long-term
ones) is relatively low. This means that the government might face difficulty
in raising local debt when the demand of foreign investors for UAH-denominated
bonds is depleted.