MinFin raises UAH 1.1 bln at local bond auction
Ukraine’s Finance Ministry raised UAH 1.1 bln at its weekly bond auction on April 6, which was the smallest amount attracted since November 2020. The auction receipts came from the placement of 3M, 12M, 20M and 2Y and 3Y bonds.
Almost half of receipts – UAH 532 mln – came from the sale of 3-month bonds to 9 out of 14 bidders with a weighted average rate of 7.77% (vs. 7.98% for these bonds a week ago). The rates on such bonds were the lowest since November. MinFin satisfied almost all the bids for other bonds, with interest rates remaining the same as at the previous placements of such bonds one or two weeks ago (10.75% for 1Y bonds, 11.1% for 20M, 11.8% for 2Y and 12.05% for 3Y).
Alexander Paraschiy: A sharp decline in demand for local bonds is likely rooted in the increased quarantine measures in Kyiv which naturally slowed business activity in the capital. It does not threaten MinFin's liquidity taking into account that this week there are no maturities of UAH bonds and non-debt proceeds to the budget look solid.
Next week, the government is going to offer nearly the same set of bonds as well as dollar bonds maturing in 2 years. We expect the same weak demand for local currency bonds next week and some good demand for dollar bonds which comes from the increased dollar liquidity of state banks as soon as MinFin redeems USD 366 mln of notes by the end of this week.