October 12, 2017 | Cbonds
Significant inflows from the Treasury supported banking sector liquidity to rise significantly on Tuesday, up UAH2.13bn to UAH77.08bn. The UAH0.66bn of debt repaid to the NBU had little impact on liquidity as banks reallocated a significant portion of funds from CDs to reserves. Of note, banks' correspondent accounts with the NBU rose a whopping UAH11.26bn to UAH41.20bn while total CDs outstanding fell UAH9.13bn to UAH25.88bn.
Non-monetary operations had a positive impact of UAH2.37bn from two injections, namely UAH3.06bn from the Treasury and UAH0.02bn via other operations, while only UAH0.71bn of funds were exchanged into cash and subtracted from inflows. NBU operations were insufficient to cause liquidity to decline, as SWAP operations were offset by other FX deals, providing UAH0.06bn of additional funds for liquidity, while only UAH0.30bn of an ON loan repayment had a negative impact.
Investment implications: The significant increase in budget expenditures enabled liquidity to recover after hitting the year's low last Friday. This increase could be routine for the second week of October, as there are no large tax payments. Moreover, all budgets accelerate upcoming expenditures coming due near the end of the budget period. Because of this, liquidity could rise significantly, possibly to a new high of UAH85bn or more.
|Full company name||ICU|
|Country of risk||Ukraine|