Yesterday, the Ministry of Finance held another primary auction, placing a slightly smaller volume of bonds than planned, as it refused to up the cut-off rate for the shorter-term instrument.
The ministry reopened "reserve" bond maturing in June 2029 for an additional UAH5bn. Typically for such paper, there was significant oversubscription — nearly 4.5x. Consequently, compared with the placement of a slightly shorter-term reserve bond a few weeks ago, the MoF lowered the cut-off rate by 15bp to 11.92%, and the weighted average yield by 23bp to 11.8%.
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.
Meanwhile, demand for the 14-month bill was quite varied. In total, the ministry received bids amounting to UAH2.1bn vs the UAH2bn cap. The yields were slightly narrower than last week—from 14.8% to 15.3% (compared with 14.9%–16% last Tuesday)—but the MoF declined to increase the cut-off rate, maintaining it at 15.1%. As a result, three bids were rejected. Ultimately, the ministry placed nearly UAH1.9bn of bonds, with a weighted average yield of 15.06%—4bp lower than at the previous auction.
Appendix: Yields-to-maturity, repayments
