Ukraine places local bonds for USD 1 bln and UAH 7 bln at decreased rates

Ukraine’s Finance Ministry received record-high
receipts of UAH 33.3 bln (equivalent) from placing UAH and USD-denominated bonds
on July 16. MinFin raised UAH 7.4 bln by placing four types of UAH-denominated
bonds with maturities ranging from three months to two years and USD 1.0 bln
placing 1Y and 2Y USD-denominated bonds.

The highest auction receipts – USD 632 mln – came from
the sale of 1Y USD-denominated bonds to 62 out of 67 bidders. The interest rate
for 1Y USD-denominated bonds went down to 6.5% from 7.0% three weeks ago. The
rest of the USD auction receipts came from the sale of 2Y bonds to 53 out of 59
bidders with a weighed average interest rate of 7.0% (vs. 7.5% three weeks
ago).

Around three quarters of the UAH auction receipts –
UAH 5.5 bln – came from the sale of 2Y bonds to 31 out of 36 bidders with a
weighted average interest rate of 17.70% (vs. 17.95% two weeks ago).  In
addition, MinFin satisfied 41 out of 52 bids for 1Y bonds for UAH 1.0 bln with
a weighted average interest rate of 17.68% (vs. 17.99% a week ago). The rest of
the auction receipts came from the sale of 3M and 7M bonds. The government satisfied
14 out of 18 bids for 3M bonds raising UAH 0.5 bln with a weighted average
interest rate of 16.96%. The other UAH 0.5 bln came from the sale of 7M bonds
to 18 out of 22 bidders with a weighted average interest rate of 17.21% (vs.
17.47% last week).

Evgeniya Akhtyrko: The
interest rates on the Ukrainian local bond market continue their downward
trend, indicating declining risk and increasing investor confidence. The market
urge for the National Bank of Ukraine to lower the key policy rate from its
current 17.5% increased even more.

The record-high demand for local Eurobonds was a
surprise, given the significant decline in interest rates. The most likely
reason is that the bond holders decided to rollover the receipts from local
Eurobonds redeemed in July (USD 508 mln on July 10 and USD 276 mln on July 18).