Ukraine’s Ministry of Finance (MoF) rejected nearly one-third of demand on military UAH bonds to keep yields steady and set the coupon rate for the new two-year regular paper.
The MoF rejected only two bids out of 19 for the 17-month bills, but they amounted to UAH250m or 40% of the total demand for this paper. This decision allowed the MoF to keep the cut-off rate unchanged at 15.85% and increase the weighted-average rate by 7bp to 15.85%.
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The MoF had to reject more demand to keep the cut-off rate for 2.5-year securities at 16.95%: three bids amounting to UAH255m or 46% of demand for this paper. The weighted-average rate rose by 10bp to 16.9%.
The most interesting offering was the new two-year regular (non-military) bonds. Total demand was below UAH0.5bn. Still, the MoF decided to reject two out of eight bids for UAH120m (26% of total demand for this instrument) and set the cut-off rate at 16.65% and the weighted-average rate at 16.61%—80bp and 84bp, respectively—above the yields for 17-month paper and just 30bp below the 2.5-year paper.
Thus, interest rates for the new two-year bills are more attractive than for military securities. Considering that the MoF suspended the increase in interest rates for military bills, it will be most interesting to see how demand will be distributed between bonds next week and whether the new bonds will attract additional demand.
The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.
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