MinFin bond auction receipts plummet to UAH 2.5 bln

Ukraine’s Finance Ministry raised UAH 2.5 bln at its
weekly bond auction on June 29 after raising of UAH 11.4 bln in total
equivalent at the auction a week ago. The auction receipts came from the
placement of 3M, 12M, 18M, 2Y, 3Y, 5Y and 6Y UAH bonds.

The rates for all the bonds remained practically
unchanged compared to the nearest previous auctions. MinFin satisfied all bids
for all bonds.

The largest receipts – UAH 744 mln – came from the
sale of 2Y bonds to seven bidders at 10.99%. Five bidders bought 5Y bonds for
UAH 554 mln at 12.59%. The sale of 2Y bonds to 15 bidders at 12.00% brought UAH
510 mln. In addition, 11 bidders bought 6Y bonds for UAH 327 mln with a
weighted average interest rate of 12.73%.

Nine participants purchased 18M bonds for UAH 203 mln
at 11.30%. MinFin satisfied five bids for 3M bonds for UAH 117 mln at 8.50%.
The least auction receipts – UAH 76 mln – came from the sale of 3Y bonds to
seven bidders at 12.30%.

Evgeniya Akhtyrko: The results
of the latest auctions are disappointing. And it’s hard to say if this was just
a result of low turnover of auction participants after a long weekend and/or
the depletion of their limits for bond purchases in June.

The activity of non-resident investors in purchasing
UAH-denominated debt increased significantly during the month. In particular,
the volume of local bonds in portfolios of non-resident investors increased by
around UAH 12 bln month-to-date. However, the results of the latest auction
demonstrate that even with this additional demand, Ukraine’s government
definitely will have problems with securing a steady cash flow from local debt
placement.

Hopefully, a wobbly situation at the local debt
market will be one more “incentive” for Ukraine’s power brokers to view the IMF
financial assistance as the only plausible option for securing resources to
finance budget deficit through the end of this year. As we wrote before, the commitment of the Zelensky administration to
an anti-corruption agenda remains a key issue for the successful development of
the Ukraine-IMF deal.