For the second month, the Ministry of Finance kept interest rates unchanged and has reacted little to the NBU's July decision to raise the key policy rate. Yesterday's auction ended with minor changes in the UAH bond yields, but provided the state budget with almost the entire planned amount of funds.
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 44.48/USD, 51.04/EUR; [3] yields on coupon-bearing bonds are effective yields to maturity. Sources: Ministry of Finance of Ukraine, Bloomberg, ICU.
The one-year military bills saw a 2x bid-to-cover ratio. The bid yields were in a much narrower range than last week, 15.08-15.25% vs 15.05-15.45%, but the offer was exhausted even at the cut-off rate of last week's auction. Therefore, the cut-off rate remained at 15.18%, and the weighted average yield even decreased slightly by 2bp to 15.16%.
At the same time, demand for 2.5-year ordinary bond was lower than supply, but also with yields in a narrower range than when this paper was last placed almost a month ago: 16.0-16.15% vs 16-16.24%. Despite a noticeable decrease in the maximum bid rate, the Ministry of Finance refused to increase yields, setting the cut-off rate at 16.1% and the weighted average yield at 16.09%, as in August.
Appendix: Yields-to-maturity, repayments
