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Raiffeisen Bank Aval Research: Comment on Ukrainian bond market

October 25, 2018 | Cbonds

In the period from 28.08.18 on 22.10.18, Ukraine’s Ministry of Finance attracted to the budget UAH2.75bn, $0.7bn, and
EUR0.03bn at the primary auctions for placement of government bonds. The bulk of the funds was raised through the
placement of short-term UAH and foreign currency govvies. The Ministry of Finance once again had to hike yields for all terms
of both UAH and foreign currency T-bills. This is due to a decrease in liquidity in the banking system, the increased demand of
the Ministry for funding as well as the presence of some offers for selling government bonds in the secondary market, which
were more attractive than the rates at primary auctions.

As a result, in the secondary market of government bonds yields also continued to increase over the entire length of
the curve. Currently rates for UAH T-bills are in the corridor from 17.00 to 21.30%. In contrast to the secondary market of
UAH govvies, where the growth of yields was observed both on bid and offer sides in approximately equal proportions, on the
secondary market of foreign currency govvies, yields increased mainly on the bid-side, while on the offer-side they grew only
slightly. This effect can be explained by the fact that the bonds placed by the Ministry of Finance with higher yields did not yet
have time to “enter” the secondary market.

Over the past month, the portfolio of government bonds owned by non-residents decreased by UAH250.7mn and as
of 22.10.2018 amounted to UAH 7,165.1mn.

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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