MinFin refuses to increase interest rates on local bonds at weekly auction

The Ukrainian Finance Ministry sold EUR-denominated
local Eurobonds maturing in 18 months for EUR 64.6 mln at its weekly bond
auction held on May 29. MinFin also placed 6M and 5Y UAH-denominated bonds for
UAH 31.6 mln and UAH 30.0 mln respectively, bringing total auction receipts to
UAH 2.0 bln (in equivalent).

The government did not satisfy one bid for 9M, two
bids for 1Y and two bids for 2Y UAH-denominated bonds as bidders wanted
interest rates higher than in previous auctions. Two out of four bids for 6M
bonds were accepted with a weighted average interest rate of 17.23% (vs. 17.20%
on May 20). Meanwhile, 5Y bonds were sold to two auction participants at 16.00%
(vs. 15.97% on April 24), while one bid at 16.40% was left unsatisfied.

The interest rate for EUR-denominated bonds inched up
to 4.07% from 4.00% during the last placement a month ago.

Evgeniya Akhtyrko: Like last
week, MinFin auctioned FCY-denominated bonds although they were not in the initial schedule for 2Q18. This should
help to compensate an expected plunge in gross reserves during the month.

So far, the bidders who tried to hike interest
rates didn’t succeed. This means that the government is not that hungry for
hryvnia resources to cover the budget deficit at the moment.