MinFin raises UAH 21 bln from local bonds as interest rates drop

Ukraine’s Finance Ministry raised UAH 11.4 bln and USD
369 mln at its weekly bond auction on May 19 after raising UAH 19.4 bln at the auction last week.
The UAH auction receipts came from the placement of 3M, 6M, 9M and 12M bonds,
while the USD receipts came from the placement of 7M bonds.

The largest UAH receipts – UAH 6.0 bln – came from the
purchase of 9M bonds by eight out of nine bidders with a weighted average
interest rate of 11.0%. The second largest receipts – UAH 3.4 bln – came from
the sale of 12M bonds to six out of ten bidders at 10.97%.

The interest rate for 3M bonds dropped to 10.50% from
11.26% for the same bonds a week ago. These bonds were sold to 11 out of 21
bidders for UAH 1.0 bln. The rest of UAH auction receipts – UAH 0.9 bln – came
from the sale of 6M bonds to 11 out of 15 bidders. The weighted interest rate
dropped to 10.78% from 11.28% for the same bonds a week ago.

MinFin satisfied 33 out of 37 bids for 7M USD bonds
for USD 369 mln with a weighted average interest rate of 3.39%. The bids ranged
from 3.3% to 4.0%, while the MinFin cutoff rate was 3.4%.

Evgeniya Akhtyrko: The bonds
offered at the latest auction were different from the initial humble MinFin
plan, which consisted of 3M and 6M UAH-denominated bonds. The increased demand
for the local debt, alongside declining interest rates, is a positive development
indicating lower risk assessments by market players.

Apparently, parliament’s approval of the banking
resolution bill on
May 13  boosted confidence at the market, as the adoption of this bill
paves the way for financing by the IMF and other international financial
institutions. The government decision to lift gradually quarantine
restrictions also
alleviated negative sentiment.