21 September 2011
Ukraine’s Finance Ministry sold UAH 165.5 mln in local bonds at a primary auction yesterday. The government offered four series with 6M, 1Y, 3Y and 5Y maturities. Market demand totaled UAH 177 mln, predominantly for 3Y papers with yields of 10-15%. The Finance Ministry accepted the lowest 10% yield. Svetlana Rekrut: The market continued to show low interest in primary placements despite a small recovery in UAH liquidity to UAH 15-18 bln (vs. UAH 11-13 bln) over the last couple of weeks. We attribute the resurgence in UAH liquidity to the National Bank purchasing UAH 3.1 bln in local treasuries last week. We see this move as falling short of reviving market interest in the local treasuries. We think the demand at yesterday’s auction was mainly from ‘friendly banks,’ while the Finance Ministry is likely to keep its low-cost borrowing policy until end-2011.