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ICU Research: NBU supports liquidity

October 27, 2017 | Cbonds

Following Wednesday's liquidity increase by an additional UAH2.31bn to UAH85.40bn, a level last seen in August 2017, for the second consecutive day, banks' correspondent accounts with the NBU declined UAH0.56bn to UAH52.38bn while total CDs outstanding rose UAH2.87bn, mostly due to the purchase of ON CDs. Banks purchased UAH2.50bn of ON CDs more than the amount redeemed and UAH0.37bn of 77-day CDs at 14.35%. These 77-day CDs are deemed 3-month CDs which the NBU sold at auction, of which it accepted 12 out of 16 bids, satisfying 81% of demand. Rejected bids had rates up to 14.55%.

The increase in liquidity was supported by the NBU, via SWAP deals with one bank, providing UAH2.48bn of funds for two weeks at 14.50%. These funds were the main source for the liquidity increase and offset of outflows via non-monetary operations of UAH0.17bn. The Treasury absorbed UAH0.75bn of liquidity while banks exchanged UAH0.61bn of cash in reserves. Also, UAH0.02bn of outflows were caused by other non-monetary operations.

Investment implications: Liquidity continued to increase on new inflows from NBU, which was in line with the low collection of taxes despite month-end tax payments this week. The NBU's injection of funds via a SWAP should be short-lived but should decrease the risk of liquidity falling to a new yearly low. At the same time, repayment of these funds to the NBU could have little impact on liquidity if budget expenditures are accelerated.


Company: ICU

Full company nameICU
Country of riskUkraine
IndustryFinancial institutions

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