The Ministry of Finance did not agree with market participants' desire to receive higher rates on UAH bonds, rejecting nearly half of the demand for them at yesterday's auction.
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 11-month bill collected bids totalling UAH1.2bn, i.e., 20% higher than the supply, and the maximum bid rate reached 15.34%. The MoF refused to satisfy three bids and limited itself to raising the cut-off rate by 4bp to 15.19%, while the weighted average yield increased by 15bp to 15.16%, i.e. only 1bp above the coupon rate of 15.15%. In fact, the MoF met only 59% of the demand received.
The 1.7-year paper maturing in April 2028 attracted almost UAH1bn in bids, but, again, the maximum rate was significantly higher than last week's cut-off rate. Some bidders wanted a rate of 15.85%, as they did in late May, but the ministry refused to increase the yield on this security and accepted only bids with yields no higher than last week's 15.65%. As a result, the Ministry of Finance satisfied only 55% of demand.
The new bond issue maturing in February 2029 received over UAH2bn in bids vs a UAH1bn cap, and automatically skipped bids with the highest rates, which reached 16.39%. The MoF sold the offered UAH1bn of bonds, setting the cut-off rate at 16.1%, and the weighted average rate at 16.07%. This is slightly higher than the yields on the bond with maturity in April 2029, which was sold at the end of July, but not higher than the maximum levels for the same instrument. So, in total, the Ministry of Finance satisfied 49% of the demand.
Appendix: Yields-to-maturity, repayments
