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Concorde Capital Research: MinFin of Ukraine offers higher interest rates on local bonds

August 08, 2018 | Cbonds

Ukraine’s Finance Ministry raised UAH 2.8 bln, USD 187 mln, and EUR 69 mln (a total of UAH 10.0 bln in the equivalent) at its weekly local bond auction held on Aug. 7 after attracting UAH 3.1 bln at two auctions held last week.

The bond drawing the most receipts – USD 130.8 mln – was the three-month USD-denominated note, which was bought by 16 bidders. The rest of the receipts came from the sale of 6M USD-denominated bonds, 3M EUR-denominated bonds, as well as 3M, 6M and 1Y UAH-denominated bonds.

The government accepted higher interest rates for its FCY-denominated local bonds. In particular, the weighted average interest rates for 3M and 6M USD-denominated bonds was 5.52% and 5.89% respectively (vs. 5.25% for 6M bonds placed two weeks ago). Meanwhile, the interest rate for 3M EUR-denominated bonds jumped to 4.39% from 4.20% two weeks ago. Notably, MinFin satisfied all 25 bids for USD-denominated bonds and all 10 bids for EUR-denominated bonds.


The government didn't change the interest rates for its UAH-denominated bond. MinFin satisfied all seven bids for 3M bonds and four bids for 6M bonds at 18.00%. One-year bonds were sold to seven out of eight bidders at a weighted average interest rate of 17.80%. The receipts from 3M and 6M bonds totaled UAH 1.8 bln and UAH 1.0 bln respectively. Meanwhile, 1Y bonds brought only UAH 0.01 bln.

Evgeniya Akhtyrko: Amid the absence of external borrowing, the government had to offer higher interest rates for its local Eurobonds in order to satisfy its foreign curency needs. Relatively thin receipts from local Eurobond placements in July confirmed the market would only accept higher interest rates. And with the recent trend of hryvnia depreciation, the government has been unable to replenish its gross international reserves by purchasing foreign currency at the ForEx. Should the government fail to secure the IMF loan tranche (https://concorde.ua/rs/daily/item_73325/), we are likely to see further interest rate hikes for local Eurobonds.

Issue: Ukraine, 201891 USD 21nov2018

StatusCountry of riskRedemption (offer)VolumeIssue Rating (M/S&P/F)
redeemedUkraine11/21/2018132,835,000 USD -/-/-

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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