MinFin bond auction receipts jump to UAH 17 bln

Ukraine’s Finance
Ministry raised UAH 6.8 bln and USD 395 mln (the equivalent of UAH 17.2 bln) at
its weekly bond auction on Oct. 26 after raising UAH 1.2 bln and USD 37 mln
(the equivalent of UAH 2.1 bln) at the auction a week ago. The auction receipts
came from the placement of 3M, 1Y, 1.5Y, 2Y, 3Y and 6Y UAH denominated bonds,
as well as 1Y USD bonds.

The sale of USD
denominated bonds to all 55 bidders at 3.70% brought 60% of all auction
receipts.

The largest auction
hryvnia receipts – UAH 2.4 bln – came from the sale of 1Y bonds to all 31
bidders with weighted average interest rate of 11.50%. MinFin satisfied all 22
bids for 2Y bonds for UAH 22 bln with a rate of 12.46% (vs. 12.40% for these
bonds a week ago). In addition, MinFin satisfied 16 out of 17 bids for 6Y bonds
raising UAH 1.7 bln at 13.10% (vs. a 13.01% rate on comparable bonds four weeks
ago).

MinFin raised UAH
620 mln from the sale of 3Y bonds to eight out of nine bidders with a weighted
average rate of 12.56% (vs. 12.49% for these bonds two weeks ago). In addition,
all nine bidders were successful in purchasing 1.5Y bonds for UAH 173 mln at
11.57%. The least auction receipts, at UAH 9 mln, came from the sale of 3M
bonds to three bidders at 9.50%.

Evgeniya Akhtyrko: As we expected, most of the auction receipts came
from the sale of local Eurobonds. However, given that MinFin repaid local
Eurobonds for
USD 661 mln last week, the receipts of USD 395 mln from the latest auction
don’t look impressive. One- and two-year papers remain the most popular among UAH
denominated bonds at the primary offer.

In October, MinFin
repaid local bonds by UAH 7.53 bln (USD 285 mln equivalent) more than placed,
which does not look encouraging taking into account the upcoming period of high
budget deficit that will require more debt financing. However, with the recently attracted MFA
tranche from
the EU for EUR 600 mln, this month MinFin has good financial backing.

Next week, MinFin is
to offer six types of UAH denominated bonds with maturity ranging from six
months to five years. We are not likely to see a noticeable increase of auction
receipts until December when, like a year ago, the government will try to
attract additional debt resources to cover all obligations and outlays budgeted
for 2021.