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Concorde Capital Research: Ukraine raises UAH 9.2 bln from local bonds

February 12, 2020 | Cbonds

Ukraine’s Finance Ministry raised UAH 4.2 bln and USD 202 mln (total UAH 9.2 bln at the equivalent) at its weekly bond auction on Feb. 11 after drawing UAH 2.3 bln at the auction last week. Auction receipts came from the placement of 14M USD-denominated bonds and 3M, 16M, 2Y and and 4Y UAH-denominated bonds.

The placement of 14M USD bonds brought more than half of the auction receipts – USD 202.3 mln. The MinFin satisfied 48 out of 69 bids with a weighted average interest rate of 3.39% (vs. 3.88% for comparable bonds placed two months ago).

The second-largest receipts – UAH 2.2 bln – came from the sale of 4Y bonds to 12 out of 17 bidders with a weighted average interest rate of 9.99% (vs. 9.88% for comparable bonds placed a month ago). In addition, two out of eight bidders were successful in buying 16M bonds for UAH 1.1 bln at 9.53% (vs. 9.77% for the same bonds a week ago).

On top of that, MinFin satisfied four out of eight bids for 3M bonds for UAH 489 mln with a weighted average interest rate of 9.46% (vs. 10.15% for comparable bonds placed two weeks ago). The rest of UAH auction receipts – UAH 456 mln – came from the sale of 2Y bonds to two out of four bidders at 10.0% (vs. 9.86% for the same bonds two weeks ago).

Evgeniya Akhtyrko: Anticipating the declining interest of nonresident investors for UAH-denominated long-term bonds, MinFin decided to offer USD-denominated bonds, which were not in the initial plans for bond auctions in 1Q20. Not surprisingly, this offer was in high demand, given the large volume of idle liquidity in foreign currency held by Ukrainian banks.

The movements in interest rates for UAH-denominated bonds were not consistent. The interest rates for 3M and 16M bonds dropped significantly, while the yields of long-term bonds rose slightly, giving the yield curve quite a conventional look now.

It looks like the period of rapid decline of interest rates for Ukraine’s local bonds has come to an end. We expect MinFin will keep the interest rates for long-term bonds at around 10% in order to maintain the interest of nonresident investors in them.

Issue: Ukraine, 207880 UAH 22may2024

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
outstandingUkraine05/22/20242,130,300,000 UAH-/-/-

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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