MinFin raises UAH 2.5 bln at local bond auction as interest rates rise

Ukraine’s Finance Ministry raised USD 75.9 mln and UAH
0.4 bln (UAH 2.5 bln in the equivalent) at its weekly bond auction on Nov. 17,
compared to UAH 7.9 bln (in the equivalent) at the auction last week. The
auction receipts came from the placement of 15M USD-denominated bonds, as well
as 1Y and 3Y UAH-denominated bonds.

Around 85% of auction receipts were generated by sale
of 15M USD-denominated bonds to 11 out of 13 bidders. The average weighted
interest rate rose to 3.77% from 3.62% a week ago. The bids ranged from 3.7% to
4.0%, while MinFin’s cut-off rate was 3.8%.

MinFin satisfied 11 out of 18 bids for 1Y
UAH-denominated bonds for UAH 299 mln at 10.5% (vs. 10.42% for 1Y bonds placed
last week). The rest of UAH receipts – UAH 75 mln – came from the sale of 3Y
bonds to eight out of 15 bidders at 11.1% (vs. 10.95% for these bonds placed
two weeks ago).

Evgeniya Akhtyrko: The
government remains devastated with raising new local debt. To draw at least
decent levels of collections, MinFin offered USD-denominated bonds, although
they were not in the initial schedule of auction bonds. Moreover, the
government hiked interest rates for local Eurobonds, which previously found
quite satisfactory demand at the market.

Next week, MinFin plans to offer five types of
UAH-denominated bonds with terms of maturity ranging from three months to four
years, as well as 1Y EUR-denominated bonds. We expect most of the auction
receipts to be generated by local Eurobonds.