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At yesterday's auction, the MoF continued to lower bond yields, but room for further decreases is becoming limited. The most notable thing yesterday was that the minimum bid rate for the one-year UAH bill did not change WoW, and for the three-year note, it increased insignificantly.
The range of bid rates for one-year paper remained the same as last week, at 15.1-15.4%, although some participants shifted their preferences slightly closer to the minimum level. Having received UAH4.6bn in bids, the MoF sold the planned volume and reduced the cut-off and weighted-average rates by 9bp to 15.19% and 15.13%, respectively.
Note: [1] payment frequency abbreviations: M - monthly, Qtly - quarterly, SA - semi-annually, @Mty - at maturity date; [2] proceeds and volumes for the USD-denominated bonds are calculated based on the previous day's exchange rate 43.53/USD, 50.95/EUR; [3] yields on coupon-bearing bonds are effective yields to maturity. Sources: Ministry of Finance of Ukraine, Bloomberg, ICU.
At the same time, the range of rates in bids for the three-year note narrowed from 84bp to 61bp. The maximum bid rate fell by 19bp to 16.6%, while the minimum rate increased by 4bp to 15.99%. For this instrument, the bidders' desires also shifted closer to the bottom, as the MoF set the cut-off rate at 16.2% and the weighted average rate at 16.16%, both down 10bp WoW.
Thus, yields on one-year paper have decreased by 122bp YTD, and on three-year note by 164bp.
Meanwhile, competition has extended the rate cut to FX-denominated securities. Since the MoF offered only US$50m of bills, and this is currently the last placement of FX-denominated bonds until the end of the 1Q26, the bid-to-cover ratio for this instrument has almost reached 8x. While the maximum bid rate decreased by only 2bp to 3.95%, the minimum rate decreased by 31bp to 3.38%. Therefore, the Ministry of Finance set a cut-off rate of 3.47% or 38bp lower WoW. The ministry set the weighted-average rate at 3.43%, down 37bp WoW.
Appendix: Yields-to-maturity, repayments
