MinFin raises UAH 17 bln from local bonds, slashes rates for local Eurobonds

Ukraine’s Finance Ministry raised UAH 2.8 bln and USD
547 mln (a total of UAH 16.5 bln in the equivalent) at its weekly bond auction
on Sept. 10 after raising UAH 1.8 bln at the auction last week. 
MinFin offered 6M, 1Y and 2Y UAH-denominated bonds and 18M and 24M
USD-denominated bonds.

MinFin cut significantly interest rates for its local
Eurobonds. Bidders had the opportunity to buy 18M USD-denominated bonds at
5.25% and 2Y bonds at 5.5%. Recall, at the latest placement of local Eurobonds
on July 16, the interest rates for 1Y and 2Y USD-denominated bonds were 6.5% and 7.0%,
respectively. The receipts from the purchase of 2Y local Eurobonds by 43
bidders amounted to USD 352 mln, and 23 bidders bought 18M bonds for USD 195
mln.

More than half of the auction’s UAH receipts – UAH 1.9
bln – were brought by the placement of 2Y bonds, which were sold to 22 out of
28 bidders at the weighted average interest rate of 15.77% (vs. 16.29% for the
same bonds two weeks ago). In addition, 19 out of 30 bidders were successful in
buying 1Y bonds at UAH 500 mln at the weighted average interest rate of 15.49%
(vs. 15.95% for the same bonds a week ago). On top of that, 6M bonds were sold
to 11 out of 12 bidders for UAH 474 mln at the weighted average interest rate
of 16.14% (vs. 16.30% two weeks ago).

Evgeniya Akhtyrko: Obviously,
MinFin “preannounced” the new interest rates for local Eurobonds, cutting out
at the start those bidders who were not ready to accept significantly lower
interest rates. Nevertheless, a sufficient amount of bidders agreed on the new
rules of the game, which confirms the abundant supply of foreign currency on
Ukraine’s market at the moment.

The demand for UAH-denominated bonds increased despite
the continuing decline in interest rates. As previously, the bidders are the
most interested in buying bonds with the longest maturity.

MinFin isn’t planning any more placement of local
Eurobonds through the end of September. The auction receipts form the placement
of UAH-denominated bonds are likely to grow moderately.