MinFin raises UAH 5 bln at unscheduled bond auction

Ukraine’s Finance Ministry raised USD 175.9 mln and
UAH 50.6 mln (a total of UAH 5.0 bln in the equivalent) at an unscheduled
auction held on Oct. 11 after raising the
equivalent of UAH 6.0 bln at its Oct. 9 auction.

The highest auction receipts – USD 101.6 mln – were
received from placing USD-denominated bonds maturing in January 2020. The
government satisfied three out of four bids while keeping the cut-off interest
rate of 7.50%, as at the Oct. 9 auction.

MinFin also sold USD-denominated bonds maturing in
January 2019 to five out of nine bidders for USD 49.2 mln at a weighted average
interest rate of  5.77%.  The rest of USD-denominated auction receipts
– USD 25.1 mln – came from the sale of 9M Eurobonds to four out of six bidders
at 7.00%.

The UAH-denominated auction receipts came from the
sale of 3M bonds to three bidders at 19.00%.

Evgeniya
Akhtyrko: By keeping high interest rates of local Eurobonds,
the government is trying to force market participants to rollover their bonds
maturing in October. Recall, MinFin is scheduled to pay around USD 750 mln on
local bond redemptions this month, and the placement of new local Eurobonds is
the only way to compensate the related losses
of gross international reserves.

Since the beginning of October, the government has
raised USD 415.1 mln and EUR 30 mln from Eurobond sales. MinFin plans to sell
local Eurobonds at two more auctions (on Oct. 16 and  Oct. 23), according to its October schedule.
In our view, the government will try to raise another USD 100-200 mln this
month, keeping interest rates at current levels.