Interest rates down

27 апреля 2016 года

Last week's reduction of the CD and NBU key interest rates should not have an impact on the primary bond market. Moreover, yesterday's demand for government bonds exceeded that seen at all previous auctions this year allowed the MoF to decrease interest rates for new borrowings. Despite this, the MoF lowered its interest rate for only one out of the five offered bonds, as they mostly received no bids.

Of the five offered bonds, the bonds with 3-month, 6-month and 9-month maturities received no bids, and the 1-year bond received only one bid which was rejected. Demand was mostly concentrated on the 3-year bond which offered the highest YTM at a 20% coupon rate.

The MoF, having received eight bids for UAH3.96bn (par value) of the 3-year bond at interest rates ranging from 18.40% to 20.00%, accepted only two bids at the lowest interest rates, selling UAH2.80bn of bonds (par value) at an 18.44% weighted average interest rate, resulting in a YTM of 19.35%. While the accepted bids had interest rates of 18.40% and 18.45%, the volume at 18.40% was quite low, resulting in most bonds being sold at 18.45%.

Most likely influenced by yesterday's high demand, the MoF announced an additional auction of new 3-year bonds to be held today. Possibly, the MoF expects to sell bonds for investors whose bids they rejected yesterday due to the higher interest rates. Also, there could be additional demand today at a new cut-off interest rate.

Источник: ICU

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