 |  |  |
Yesterday, the MoF changed its offer for UAH bonds, which did not allow it to increase the budget proceeds.
The one-year bonds remained the same as those offered by the Ministry since January. The demand was relatively small: the Ministry received 20 bids for UAH845m. All competitive bids had rates in a very narrow range—16.3-16.35%—no higher than the cut-off rate of the previous auction. So, the Ministry satisfied all bids for this instrument.
The MoF replaced the 2.3-year UAH military paper with 1.9-year ordinary bills, which were last offered in February. The range of interest rates was wide, and an increase above the 2.3-year paper cut-off level was required. Therefore, the MoF rejected almost half of demand, satisfying only 14 bids for UAH1.2bn. The Ministry set the cut-off and weighted average rates at 17.1%, 35bp below that for the 2.3-year bills.
Yesterday's third paper was the new 3.6-year notes with maturity at the end of October 2028. These bonds will become new reserve paper that banks can use to cover part of mandatory reserves. This paper was more than 7x oversubscribed—UAH36.7bn vs UAH5bn cap—and the bid rates ranged from 14.9% to 16.2%. However, the Ministry satisfied only 13 bids with rates up to 15.5%, setting the weighted average rate at 15.01%.
The budget received UAH7.4bn, slightly lower than the average weekly proceeds from UAH bonds in March. New reserve bonds received significant oversubscription, and in the coming weeks, banks will primarily compete in purchasing them, paying less attention to the rest of the government bonds.
Appendix
