Ukraine raises UAH 6.7 bln from local bond sale

Ukraine’s Finance Ministry raised UAH 6.4 bln and USD
9.9 mln (a total of UAH 6.7 bln in the equivalent) at its weekly bond auction
on Feb. 5 after raising the equivalent of UAH 18.4 bln at the auction last week.

The highest UAH receipts came from the sale of 3M
bonds to 24 out of 26 bidders for UAH 3.0 bln at 19.5%. Four bidders bought 7M
bonds for UAH 1.9 bln at 19.0%. The government declined one bid for 6M bonds at
19.5%, but satisfied the remaining 24 bids at a weighted average interest rate
of 18.92%, raising UAH 0.9 bln. MinFin also sold 10M bonds to two out of three
bidders for UAH 10.2 mln at 18.5%, 1Y bonds to all seven bidders at a weighted
average interest rate of 18.47% for UAH 281 mln and 2Y bonds to seven out of
eight bidders at 18.0% for UAH 218 mln.

Three-quarters of the auction’s USD receipts came from
the sale of 1Y bonds to ten out of 13 bidders for USD 7.4 mln at 7.25% – the
same rate at which 9M bonds were placed last week. The government satisfied all
eight bids for 6M bonds for USD 2.5 mln at 6.7% (the same rate as the last
week).

Evgeniya Akhtyrko: The
government’s foreign currency needs in February are high, given the redemption
of local Eurobonds for USD 286.6 mln on Feb. 21 and for USD 457.5 mln on Feb.
27. Meanwhile, these results indicate that the market capacity to supply
foreign currency through the purchase of new local Eurobonds is apparently not
sufficient to cover these needs.

Oschadbank (OSCHAD) is scheduled to pay USD 477 mln on
its international Eurobonds in March. So, one of the important participants in
the local bond market is not likely to be in play, as it needs to accumulate
foreign currency for its own repayments.

To catch up with foreign currency receipts, the
government might resort to hiking interest rates for local Eurobonds.