Liquidity reallocated back to CDs



15 липня 2015 года
ICU

Broader banking sector liquidity rose UAH1.13bn to UAH72.04bn due to an increase in total debt repayments scheduled for the next 30 days, up UAH1.16bn to UAH6.44bn. Funds from banks' correspondent accounts were reallocated to CDs, as there are no other available instruments for short-term investments. Banks' correspondent accounts with the NBU declined UAH2.16bn to UAH23.56bn while total CDs outstanding increased UAH2.13bn. KyivPrime interest rates slightly diverged, as the ON interest rate rose 50bp to 21.50% while the 1M interest rate slid 17bp to 25.50%.

Investment implications: The NBU did not offer 1-month CDs on Monday or yesterday an instead announced tenders of 1-month and 3-month CDs today at interest rates lower than before, no higher than 22% for both offerings. Even though the NBU offered government bonds from its portfolio at a maximum rate of 21.20%. Instead, banks prefers CDs with tenors of up to 14 days at interest rates up to 26%. Banking sector liquidity has remained rather steady as funds were reallocated between banks' accounts and CDs. While this activity should continue, declining interest rates on low risk assets could force banks to either invest in CDs with shorter maturities or buy a limited supply of government bonds that are more attractive than CDs.

Источник: ICU

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