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At yesterday's auction, high competition for new bonds persisted, but the rate of decline in final rates slowed, and the maturity premium changed little.
The one-year military bill had a 4.6 bid-to-cover ratio in 41 bids with yields in a rather narrow range - from 15.1% to 15.4%. Most of the competitive bids turned out to have rates no higher than 15.28%, and this level became the cut-off rate; the MoF rejected only 7 bids completely. So, the cut-off rate decreased by another 12bp WoW and 107bp YTD. The weighted average yield of one-year securities at the auction slid yesterday by another 12bp WoW 113bp YTD.
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 43.22/USD, 50.95/EUR; [3] yields on coupon-bearing bonds are effective yields to maturity. Sources: Ministry of Finance of Ukraine, Bloomberg, ICU.
Yesterday, the three-year ordinary note recorded a bid-to-cover ratio of 8.2. For this paper, the bid rate range has more than doubled. The minimum rate in bids fell by 45bp to 15.95%, while the maximum rate remained unchanged at 16.79%. However, there were few bids with low rates, which had little influence on the final rates. The cut-off rate decreased by another 13bp WoW to 16.3%, and the weighted average by 16bp to 16.26%, or 150bp and 154bp YTD, respectively. Thus, the maturity premium decreased by only 1bp WoW to 102bp.
At the same time, the reserve bond received restrained oversubscription, with demand only 60% above supply. The weighted average rate rose by 3bp WoW to 12.95%, and the cut-off yield remained at 13.1%.
The first placement of USD-denominated bills was long-awaited. The volume of bids was 2.4 times greater than supply. The accumulated demand after two months without such instruments also affected yields. The cut-off rate decreased by 15 bp to 3.85% compared with the prevous such placement last year, and the weighted-average rate fell by 18bp to 3.8%.
Appendix: Yields-to-maturity, repayments
