Ukraine’s Ministry of Finance (MoF) rejected yesterday a major part of the demand for military bills as it did not want to increase interest rates on them.
New 1.5-year bills received 24 bids, amounting to UAH3.3bn, with interest rates ranging from 15% to 16%. The MoF rejected the most significant bid, amounting to UAH2.0bn, with the highest rate. Therefore, the MoF set the cut-off and weighted-average rates at 15.1% or 10bp below a similar bond sold last November.
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The MoF made a similar decision for a 2.5-year paper. Out of 24 bids, which amounted to UAH3.9bn, the MoF rejected two with interest rates above 16.2%, which amounted to UAH2bn. Therefore, the MoF set the cut-off and weighted-average rates at 16.2%, 1bp, and 5bp above last week’s levels.
At the same time, four-year notes received UAH43bn of demand in 48 bids vs the UAH5bn cap, which was exhausted at the lowest rate, 14.7% or 130bp, below last week’s level.
Finally, the MoF received UAH8.8bn last week and UAH13.8bn YTD, slightly more than half of UAH23bn of debt repayments scheduled for January. With two more auctions this month, the MoF will refinance these repayments fully, but is unlikely to increase interest rates, as demonstrated yesterday.
The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.
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