Yesterday, the Ministry of Finance increased borrowings fivefold, raised interest rates on UAH military bonds for the second time in a row, but just by 25bp vs 50bp last week. The Ministry also placed a considerable amount of USD-denominated bills. So, in total, the budget received over UAH13bn.
The volume of bids for UAH military bills rose by a third to UAH3.2bn, including UAH1.5bn for 1.5-year bills, the same as last week, and almost doubled from last week to UAH1.7bn for 2.5-year paper.
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The 1.5-year securities received 33 bids with rates in the range of 15.5%-16.2%, which is very close to last week, but in an even narrower range: following the MoF’s decision to raise rates by 50bp the previous week, the bidders raised the minimum rate by 40bp to 15.5% yesterday, and the maximum rate by only 20bp to 16.2%. The MoF decided to increase the cut-off rate by another 25bp to 15.85% and satisfy almost all bids, rejecting only two for UAH150m. The weighted average rate increased by 42bp to 15.77%.
A similar decision was made regarding 2.5-year securities, although the rate range widened. The Ministry rejected four bids for UAH600m but raised the rates similarly by 25bp to 16.95%. However, the weighted average rate increased by only 10bp to 16.8%.
As expected, foreign currency government bonds received the most significant demand. After the MoF redeemed US$353m of bonds last week, the Ministry planned to sell US$150m of new securities but then increased the cap to US$250m. The USD-denominated bills received considerable demand: 127 bids for US$514m with rates from 4.1% to 4.62%. The MoF set the cut-off rate at 4.6%, rejecting only one bid and satisfying some bids partially within the cap.
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