Ukraine’s Ministry of Finance announced yesterday that it sold UAH 3 bln (USD 518 mln) via local bond auctions yesterday at a primary auction yield of 15.6%. The bonds mature on Sept. 28, 2011. The government did not have any takers for issues maturing on April 1 and May 27, 2009 and May 5, 2010. Oleksandr Klymchuk: The amount raised is almost twice more than what the government has sold all this year in previous attempts. Another notable feature is the yield, which is 160 bps lower than the previous successful auction two weeks ago (where only ~USD 14 mln was sold) and roughly 500 bps lower than the secondary market yield. There is intrigue about the possible buyer. The amount is quite noteworthy for local banks, accounting for tight liquidity with corresponding accounts of UAH 13.7 bln and an overnight rate of 21.8%. However, we see a possibility that state-owned Oshchadbank was the buyer, with the purpose of a quick resale to the NBU. As the NBU is forbidden to participate in primary government auctions by law, the authorities might use such a mechanism to transfer funds from the NBU reserves to the government to accumulate money in the recently created stabilization fund, which was required by the IMF loan deal. The NBU is due to receive the first USD 4.5 bln tranche of the IMF loan in the coming days to replenish its FX reserves.