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Concorde Capital Research: MinFin of Ukraine raises rates for local bonds

October 03, 2018 | Cbonds

Ukraine’s Finance Ministry raised USD 67.0 mln from the sale of 9M local Eurobonds and UAH 881.2 mln from the sale of 3M, 6M, 1Y, and 2Y bonds (a total of UAH 2.8 bln in the equivalent) at its weekly local bond auction held on Oct. 2. These are the highest weekly auction receipts since Aug. 7.

The government satisfied all 16 bids for USD-denominated bonds with interest rates ranging from 5.95% to 7.00%. The weighted average interest rate amounted to 6.82%, increasing from 5.95% last week.

The lion’s share of UAH auction receipts – UAH 834.4 mln – came from the sale of 3M bonds. MinFin agreed to higher interest rates while satisfying 17 out of 19 bids with a weighted average interest rate of 18.91% (vs. 18.50% last week). The threshold interest rate for placed 3M bonds amounted to 19.00%.

MinFin satisfied all six bids for 6M and all six bids for 1Y bonds at the unified interest rate of 18.50%. The sale of 6M bonds brought UAH 12.3 mln, while 1Y bonds were sold for UAH 31.5 mln. The government also sold 2Y bonds to one auction participant for UAH 3 mln at the interest rate of 17.25%, while the other six bids were left unsatisfied.

Evgeniya Akhtyrko: Very low receipts from September’s bond auctions has resulted in difficulties with deficit financing this month. Without access to other sources of deficit financing (i.e. external markets or privatization proceeds), the government resorted to raising interest rates for bonds at this latest auction in order to revive the domestic bond market.

The government is likely to keep higher interest rates for UAH-denominated bonds with the shortest maturity term. The interest rate of 7% for USD-denominated bonds is likely to be maintained until the situation with IMF financing is positively resolved.

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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