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The MoF offered both UAH and FX-denominated bonds yesterday and borrowed almost UAH14bn, mostly in local currency. However, such distribution is the result of the limited offering of USD-denominated bills.
The MoF satisfied all bids to purchase UAH bonds as yields were usual and did not affect the cut-off and weighted average rates in any way. The one-year UAH bill provided the state budget with UAH2.8bn, the 19-month paper with less than UAH0.3bn, the two-year bond with almost UAH1.7bn, and the three-year note with almost UAH2.1bn.
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 42.25/USD, 49.12/EUR; [3] yields on coupon-bearing bonds are effective yields to maturity. Sources: Ministry of Finance of Ukraine, Bloomberg, ICU.
As expected, there was low demand for EUR-denominated paper, resulting in budget proceeds equivalent to UAH0.7bn, with a 2bp increase in the weighted average rate to 3.24%, while the maximum satisfied rate remained unchanged at 3.25%.
At the same time, the USD-denominated paper saw 2x oversubscription - almost US$315m vs the US$150m cap. Therefore, the MoF rejected bids with high interest rates and most of the bids were accepted partially due to low supply. The Ministry of Finance reduced the cut-off rate by 5bp to 4%, and the weighted average rate decreased by 3bp to 3.98%.
The auction schedule does not include any FX-denominated bonds for the rest of the year. However, we will see two more auctions with UAH bonds only.
Appendix: Yields-to-maturity, repayments
