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The Ukrainian Finance Ministry speaks of increase in investor confidence in government bonds

January 24, 2005 | Cbonds

Decrease of weighted average yield on domestic government bonded loan on primary auctions and growth of placement sizes show that investor confidence in Ukrainian government debt is growing, the Finance Ministry’s statement says (www.minfin.gov.ua).

In the first three weeks of January 2005, the Finance Ministry placed domestic government bonded loans (OVGZ) due in two, three and five years in total amount of 1.044 bln hryvnias at par, which corresponds to the quarter of the overall amount approved by the public budget of 2005.

In January of 2004 the ministry placed securities with a maximum tenor of 1.5 years in amount of 72.1 mln hryvnias.

Weighted average yield of OVGZ with 1.5 year tenor equaled 11.80% p.a. in January of 2004. Weighted average yield of 5-year bonds at the last auction on January 18, 2004, decreased to 11.22% from 11.94% at the previous auction on January 5.

“This is an evidence of growing confidence in Ukrainian government securities as a result of benign investor expectations in mid- and long-term perspective”, - the press-release says.

According to the Finance Ministry’s information, a large amount of the OVGZ issue was bought by non-residents.

The Ministry did not specify the exact figure.

The public budget law allows the government to borrow 4.0 bln hryvnias on domestic market and 8.4 bln hryvnias (around USD1.6 bln) on external market.

At the same time, the country has to pay off 3.1 bln hryvnias on domestic debt, and 9.4 bln hryvnias (around USD1.7 bln) on international debts.

In 2004 the overall amount of OVGZ equaled 4.1 bln hryvnias, of which 1.9 bln hryvnias fall within 5-year VAT bonds.

Based on Reuters data

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