Finance Ministry attracts UAH 630 mln, 6M yield set at 9%

Yesterday the Finance Ministry held a regular primary UAH sovereign debt auction. It raised UAH 629.1 mln (USD 79.6 mln), an increase of 39% from the previous week’s auction. Mykyta Mykhaylychenko: Predictably, the largest demand was for 6M papers (93% of yesterday’s volume), while demand for papers with longer maturity is now concentrated on the VAT bond market (sinkable papers with five years to maturity and duration of ~2.2). Yield for half-year bonds was set yesterday at 9%, down from 9.5% for 7M papers a week before. The government will have to redeem UAH 1.5 bln worth of UAH bonds today, UAH 0.5 bln in a week and UAH 2.1 bln in October. We see the tight redemption schedule pushing rates in the months ahead while demand will still be concentrated on shorter-term papers at the primary auctions.