MinFin weekly local bond receipts plunge to UAH 0.3 bln

Ukraine’s Finance Ministry raised UAH 0.3 bln at its
weekly bond auction on Sept. 22, compared to UAH 6.0 bln (in the equivalent) at
the auction last week. The auction
receipts came from the placement of 3M, 1Y and 2.5Y bonds.

The 1Y bonds were sold to three out of six bidders for
UAH 166 mln at a weighted average interest rate of 9.46% (vs. 9.28% for these
bonds two weeks ago). MinFin satisfied all three bids for 3M bonds for UAH 133
mln at 7.0%. The rest of auction receipts – UAH 30 mln – came from the sale of
2.5Y bonds to five out of ten bidders at 10.5% (vs. 10.46% for these bonds two
weeks ago).

Evgeniya Akhtyrko: These
results meet our expectations that auction receipts would drop. It looks like
even state-owned banks are refusing to allocate their resources to assets with
non-competitive interest rates. Apparently, Ukraine’s market players are
assigning a high risk to the market, and we don’t see much chances for this to
improve in the nearest time.

Meanwhile, if the government resorts to hiking
interest rates, that would undermine the proposal under consideration by the
Zelenskiy administration to flood the economy with low-cost loans in order to
stimulate economic growth.

Next week, MinFin is scheduled to place 6M, 1Y, 2Y
and 4Y UAH-denominated bonds. The auction receipts are likely to remain low.