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Concorde Capital Research: MinFin of Ukraine raises interest rates on 2Y local Eurobonds

March 27, 2019 | Cbonds

Ukraine’s Finance Ministry raised UAH 3.7 bln and USD 62.5 mln (a total of UAH 5.4 bln in the equivalent) at its weekly bond auction on March 26 after raising UAH 12.5 bln at the auction last week. The government placed five types of UAH-denominated bonds with terms of maturity ranging from four months to two years and 3M, 1Y and 2Y USD-denominated bonds.

Around a half of the UAH auction receipts – UAH 2.1 bln – came from the sale of 2Y bonds to nine bidders at 18.0%. In addition, 32 auction participants purchased 4M bonds for UAH 1.2 bln at 19.5%. Seven bidders bought 16M bonds for UAH 520 mln at 18.25%, eight bidders bought 6M bonds for UAH 15 mln at 19.0%, and four bidders purchased 11M bonds for UAH 3.5 mln at 18.5%. Three participants bid for 4.5Y bonds, but the government refused to sell these bonds, apparently finding the offered interest rate of 17.0% too high.

The government satisfied all bids for USD-denominated bonds. The lion’s share of the USD auction receipts – USD 52.4 mln – were raised by the sale of 2Y bonds to 13 bidders. The weighted average interest rate for 2Y bonds increased to 7.75% from 7.5% last week. Seven bidders bought 3M bonds for USD 8.5 mln at 6.5% and 1Y bonds for USD 1.6 mln at 7.25%.

Evgeniya Akhtyrko: The government is trying to boost demand for local Eurobonds with longer maturity by hiking their interest rates. At the moment, this tactic has found a positive response on the market as buyers shifted their interest to 2Y bonds from 3M bonds, which were in highest demand previously.

As for UAH-denominated bonds, its bidders have used this opportunity to buy more 2Y bonds, as the current coupon of 18.0% looks very rewarding amid growing expectation that interest rates will likely decline if the National Bank of Ukraine resorts to cutting the key policy rate in April.

Issue: Ukraine, 203715 UAH 17jul2019

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redeemedUkraine07/17/20194,637,816,000 UAH-/-/-

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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