MinFin raises UAH 1.8 bln from local bonds, lowers interest rates

Ukraine’s Finance Ministry raised UAH 1.8 bln at its weekly
bond auction on Aug. 27 after raising UAH 1.0 bln at the auction
last week.  MinFin offered 6M, 1Y, 2Y and 5.5Y bonds.
Interest rates declined for all placed bonds.

Around three-quarters of auction receipts – UAH 1.4
bln – came from the sale of bonds expiring in February 2025, which were sold to
15 out of 25 bidders with a weighted average interest rate of 15.30% (vs.
15.45% for the same bond a month ago). The 6M bonds were sold to seven out of
eight bidders for UAH 289 mln with a weighted average interest rate of 16.30%
(vs. 16.47% for the same bond two weeks ago).

In addition, three out of five bidders were successful
in buying 1Y bonds for UAH 67 mln at 16.0% (vs. 16.04% last week). On top of
that, MinFin satisfied all eight bids for 2Y bonds for UAH 28 mln with a
weighted average interest rate of 16.29% (vs. 16.43% two weeks ago).

Evgeniya Akhtyrko: Our forecast
on the volume of this week’s placement has proven accurate. As the interest
rates for bonds continue to decline, the government’s current weekly needs are
not likely to exceed UAH 1-2 bln.

Receipts from local bond placements will rise next
month. Once the summer lull is over, the activity of market participants should
increase alongside government needs in financing the budget deficit.