MinFin raises UAH 4.6 bln at local bond auction, rates increase

Ukraine’s Finance Ministry raised UAH 4.6 bln at its
weekly bond auction on April 20 after raising UAH 1.6 bln equivalent at the
auction last week. The auction receipts came from the placement of 3M, 12M, 20M
and 3Y local currency bonds.

The interest rate for 1Y bonds increased to 11.15%
from 10.75% last week. The sale of these bonds to 19 bidders brought the lion’s
share of auction receipts, or UAH 4.4 bln. The interest rate for 6Y bonds,
which were sold to 11 bidders for UAH 152 mln jumped to 12.75% from 12.5% a
month ago.

MinFin satisfied seven out of eight bids for 3M bonds
for UAH 33 mln at 8.50% (vs. 7.77% for these bonds two weeks ago). The rest of
auction receipts – UAH 3 mln came from the sale of 20M bonds to two bidders at
11.30% (vs. 11.10% for these bonds last week).

Evgeniya Akhtyrko: Even with a
hiking of interest rates, the receipts from the latest auctions were quite
modest, and they are definitely not enough to compensate for the failure of the
two previous auctions. The increased involvement of state-owned banks at the
latest auction was very likely.

The auction next week is likely to be higher as the
sale of 1Y USD denominated and 1Y EUR denominated bonds should attract more
buyers. The sale of UAH denominated bonds is still likely to face difficulty as
the risk assessments of auctions participants will not improve.