Yield curve shifts downward

11 мая 2016 года

Compared with proceeds from the last few auctions at the end of April, May's debut auction resulted in insufficient proceeds as the MoF attracted only UAH0.71bn of funds versus UAH5.79bn raised two weeks ago. However, despite significantly lower demand and actual proceeds, the MoF continued to decrease cut-off interest rates for local currency bonds.

Of the four bids received for the 2-year bond, the MoF accepted only two for a paltry total of UAH0.60bn at 17.90%. At 180bp below the coupon rate accepted at the recent auction of this bond, this decline exceeds the 155bp reduction seen two weeks ago for the 3-year bond. Meanwhile, the interest rate for the 12-month bond fell only 100bp to 17.50%, and the MoF accepted the sole bid to officially reduce the rate.

Bonds with shorter maturities received no bids yesterday, most likely because investors were unwilling to accept rates below the newly reduced level of 16.20% for the 3-month bond.

Next week, the MoF is scheduled to offer the 3-year bond, possibly reducing the cut-off interest rate by only 10-20bp. We doubt that the cut-off interest rate will decline more than 20bp, because such a move would approach the rate for the 2-year bond and be deemed unacceptable.

Источник: ICU

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