Primary auction: FX-bond offering

24 мая 2016 года

Today's primary auction could be very active with demand concentrated on the 1.5-year USD-denominated bond offering. Out of the five local currency denominated bonds, only the 12-month and 2-year bonds are expected to see some, albeit not much, demand today.

Investment implications: Due to MoF needs in FX through the end of 2Q16 of about US$0.26bn, the Ministry will seek the lowest interest rates as it also must cover current needs in FX for debt repayments. The MoF prefers to avoid drawing down FX reserves, especially as the new tranche from the IMF most likely to come from USD-backed bonds to be issued no earlier than July. FX-denominated bonds with a similar maturity were sold this past January at 8% cut-off and 7.67% weighted average interest rates. Because of this, we do not expect the MoF to accept bids with interest rates above 7.67%. Rates could come in slightly lower, a move which would decrease the cost of borrowings.

Источник: ICU

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