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Concorde Capital Research: MinFin of Ukraine keeps unchanged interest rates on local bonds

September 05, 2018 | Cbonds

Ukraine’s Finance Ministry raised USD 12.6 mln and UAH 15.0 mln (a total of UAH 372.8 mln in the equivalent) at its weekly local bond auction held on Sept. 4 after attracting UAH 21.2 mln at the auction held last week.

All local Eurobonds were sold at the unified interest rate of 5.95% – the same as for 6M local Eurobonds placed two weeks ago. The government satisfied seven out of 13 bids for 9M local Eurobonds for USD 7.6 mln and five out of nine bids for 1.5Y local Eurbonds for USD 5.0 mln.

The demand for UAH-denominated bonds was weak as the government satisfied all five bids for 3M notes, two bids for 6M and two bids for 1Y at a unified interest rate of 18%. The highest UAH receipts – UAH 6.7 mln – came from the sale of 3M bonds while 6M and 1Y bonds were sold for UAH 2.0 mln and UAH 6.3 mln, respectively.

Evgeniya Akhtyrko: Keeping in mind the latest placement of 6M international discounted notes on Aug. 23 at a yield to maturity of 9.2%, some local market participants expected higher interest rates on local Eurobonds. Nevertheless, the government has abstained from hiking interest rates on FCY-denominated local debt.

The government will be offering local Eurobonds at every weekly bond auction in September, according to an updated schedule from the Finance Ministry. However, the weak results of the latest auction indicate that without interest rate hikes, the government will encounter difficulty with raising even USD 100 mln to refinance September’s redemption of previously issued local Eurobonds.

As for UAH-denominated local bonds, the market is waiting for the central bank’s decision regarding the key policy rate on Sept. 6. In our view, substantial deterioration of Ukraine’s current account in July added more arguments for hiking the key policy rate from 17.5% currently.

Company: Concorde Capital

Full company nameConcorde Capital
Country of riskUkraine
IndustryFinancial institutions


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