MinFin raises UAH 4 bln at local bond auction

Ukraine’s Finance Ministry raised 3.9 bln at its
weekly bond auction on Jan. 11 after raising UAH 15.0 bln at the previous auction two weeks ago. The auction receipts came from
the placement of 3M, 1Y, 1.5Y, 2Y, 3Y and 4Y bonds.

Around half of all auction receipts came from the sale
of 1Y bonds to 24 out of 26 bidders for UAH 2.1 bln with a weighted average
interest rate of 12.94% (vs. 12.90% at the previous auction). MinFin placed 1Y
and 1.5Y bonds at the same interest rate of 11.90%. In particular, the sale of
1Y bonds to 17 out of 18 bidders brought UAH 627 mln, MinFin sold 1.5 Y bonds
to six bidders for UAH 33 mln.

MinFin received UAH 623 mln from the sale of 3M bonds
to 17 bidders at 10.95%. In addition, 11 out of 13 bidders were successful in
purchasing 3Y bonds for UAH 412 mln at 12.95%. On top of that, MinFin satisfied
all 12 bids for 4Y bonds for UAH 117 mln with a weighted average interest rate
of 13.09%.

Evgeniya Akhtyrko: Apparently,
the government didn’t look for high receipts at the first auction of the new
year, given the traditional post-holiday slowdown of business activity. But
even without high targets, MinFin had to hike the interest rate for 1Y bonds,
which were the most in demand. This indicates that investors believe that
market risks are increasing.

Next week, the government is to offer six types of UAH
denominated bonds with maturity ranging from six months to five years as well
as 1Y USD denominated bonds. The auction receipts are likely to go up, as the
offer of local Eurobonds usually increases market activity.