MinFin raises UAH 2.9 bln from local bonds as interest rates drop

3 June 2020

Ukraine’s Finance Ministry raised UAH 2.9 bln at its weekly bond auction on June 2 after raising UAH 1.0 bln at the auction last week. The auction receipts came from the placement of 3M, 6M, 9M and 12M bonds. Interest rates dropped for all types of bonds.

 

The largest UAH receipts – UAH 1.3 bln – came from the sale of 12M bonds to ten out of 13 bidders with a weighted average interest rate of 10.86% (vs. 10.97% for the same bonds last week). MinFin satisfied two out of four bids for 9M bonds for UAH 649 mln at 10.89% (vs. 11.0% two weeks ago).

 

Six out of seven bidders were successful in purchasing 3M bonds for UAH 525 mln with a weighted average interest rate of 9.84% (vs. 10.19% last week). The rest of the auction receipts – UAH 477 mln – came from the sale of 6M bonds to seven out of 12 bidders with a weighted average interest rate of 10.11% (vs. 10.33 last week).

 

Evgeniya Akhtyrko: It looks like MinFin now is more interested in lowering interest rates for local debt rather than maximizing auction receipts. And this policy is fine as long as the collections from the bond placements are sufficient for covering the budget deficit. The higher demand for 9M and 12M bonds, rather than 3M and 6M bonds, is also a positive sign indicating lower risk assessments.

 

We are likely to see a spike in auction receipts next week, as MinFin has added 12M EUR-denominated local bonds to the offer. The UAH bonds to be offered will range from three to 18 months.

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