Ukraine MinFin raises rates for local bond placements

Ukraine MinFin raises rates for local bond placements



14 грудня 2017 года
Конкорд Капитал

Ukraine’s Finance Ministry placed on Dec. 12 UAH 3.18 bln in local bonds maturing in late February 2018 at a yield of 16.27%, which was 0.32pp higher than those placed a week before. It also raised UAH 0.33 bln from the placement of six-month bonds at a 15.85% yield and UAH 0.35 bln from five-year bonds placed at a yield of 15.74%.

Alexander Paraschiy: As Ukraine's central budget is turning to deficit after enjoying surplus for most of the year (by the end of October central budget had UAH 1.4 bln in surprlus, while spending have been mounting), MinFin has had to become more active in borrowings, even though interest rates at the local market are not favorable. In particular, short-term local debt has become more expensive since late October, when the central bank (ther NBU) raised its key rate by 1.0pp to 13.5%, as well as started issuing 3-month certificates of deposit (for a total issue amount limited to UAH 0.3 bln per week) at rates that peaked at 15.25% in early November. On the other hand, the NBU has been gradually reducing its CD rates since then. In particular, at the Dec. 13 auction it sold 3M CDs at 14.5%, down from 14.89% a week before.

Given this trend, it seems like the higher rates for MinFin’s placement could only be explained by an unexpectedly large amount of the government’s borrowing in local currency (total UAH 3.9 bln, up from UAH 0.5 bln raised last week). Another possible explanation for the higher costs of MinFin’s borrowing this week could be the expectations of local bank (who purchased new bonds) of a further hike of the NBU’s key rate. The central bank is going to be consider the revision today.

Источник: Конкорд Капитал

Аналитик: Александр Паращий
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