MinFin raises UAH 20 bln at the local bond auction, hikes rates again

Ukraine’s Finance Ministry raised UAH 12.1 bln and USD
307 mln (the total equivalent of UAH 20.5 bln) at its weekly bond auction on
Dec. 21 after raising the total equivalent of UAH 10.8 bln at the auction last
week. MinFin placed nine types of UAH denominated bonds with terms of maturity
ranging from three months to six years as well as 1Y USD denominated bonds.
MinFin hiked the interest rate for most UAH denominated bonds.

The largest UAH receipts – UAH 3.8 bln – came from the
sale of 6M bonds to three bidders at 10.80% (vs. 10.75% last week). MinFin
satisfied all 22 bids for 1Y bonds for UAH 2.6 bln with an weighted average
interest rate of 11.88% (vs. 11.77% last week). In addition, 21 out of 23
bidders were successful in purchasing 2Y bonds for UAH 2.0 bln at 12.78% (vs.
12.65% last week). The sale of 3M bonds to 15 out of 16 bidders at 10.50%
brought 1.7 bln.

MinFin raised UAH 924 mln from the sale of 31M bonds
to seven bidders at 12.90%. Two bidders bought 29M bonds for UAH 883 mln at
12.85%. MinFin satisfied 11 out of 12 bids for 3Y bonds for UAH 72 mln with an
weighted average interest rate of 12.88% (vs. 12.85% last week). Twelve bidders
bought 6Y bonds for UAH 60 mln at 13.25%. The least auction receipts, at UAH 4
mln, came from the sale of 1.5Y bonds to five bidders at 11.88%.

MinFin satisfied 39 bids for local Eurobonds at 3.70%
leaving out one bid at 13.75%.

Evgeniya Akhtyrko: We were
right in our expectations that the government will resort to another hike of interest rates
in order to generate more local debt and finance budget needs at the end of the
fiscal year. Apparently, MinFin chased all possible bids at the market while
offering bonds with all possible terms of maturity.

For the last auction in 2021 on Dec. 28, MinFin plans
to offer six types of UAH denominated bonds with terms of maturing ranging from
six months to five years. Hopefully, the last-minute government spending will
not call for another hike of interest rates.