Lowering budget proceeds

27 января 2016 года

Continuing last week's building of the primary market yield curve, the MoF sold 9-month and 1.5-year bonds yesterday. As the interest rates decreased, the MoF also decreased the amount of budget proceeds compared with previous auctions. The MoF should receive UAH64.15m of proceeds today from the small volumes of two bonds that were sold. Over the last two weeks, the MoF sold UAH100m (par value) of each bond, raising budget proceeds of a total of UAH184.87m (excluding FX-denominated bonds).

Of the UAH340.48m in total demand for the four bonds offered yesterday from twelve bids at interest rates ranging from 18.50% to 21.10%, the MoF accepted only bids with lowest level of interest rates, per routine. As a result, only two bids at small volumes were accepted, one for the 9-month bond and one for the 1.5-year bond.

The interest rate for the 9-month bond was accepted at the same level as that of the 12-month bond sold two weeks ago, while the interest rate for the 1.5-year bond was 20bp lower than that of the 2-year bond sold last week. While the MoF decreased the amount of budget proceeds, the yield-curve did not form a U-shape, but instead moved the short-term end above the level for the 12-month bond.

As low demand for the bonds at the acceptable interest rates indicate that the yield curve is at its lowest level, demand for bonds offered next week could be lower than it was yesterday. However, due to the limited amount of bond offerings, the MoF is unlikely to borrow large amounts of funds and should continue to build the yield curve at quite possibly the lowest levels.

Источник: ICU

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