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Concorde Capital Research: MinFin of Ukraine raises UAH 17 bln from local bonds, slashes rates for local Eurobonds

September 11, 2019 | Cbonds

Ukraine’s Finance Ministry raised UAH 2.8 bln and USD 547 mln (a total of UAH 16.5 bln in the equivalent) at its weekly bond auction on Sept. 10 after raising UAH 1.8 bln at the auction last week. MinFin offered 6M, 1Y and 2Y UAH-denominated bonds and 18M and 24M USD-denominated bonds.

MinFin cut significantly interest rates for its local Eurobonds. Bidders had the opportunity to buy 18M USD-denominated bonds at 5.25% and 2Y bonds at 5.5%. Recall, at the latest placement of local Eurobonds on July 16, the interest rates for 1Y and 2Y USD-denominated bonds were 6.5% and 7.0%, respectively. The receipts from the purchase of 2Y local Eurobonds by 43 bidders amounted to USD 352 mln, and 23 bidders bought 18M bonds for USD 195 mln.

More than half of the auction's UAH receipts – UAH 1.9 bln – were brought by the placement of 2Y bonds, which were sold to 22 out of 28 bidders at the weighted average interest rate of 15.77% (vs. 16.29% for the same bonds two weeks ago). In addition, 19 out of 30 bidders were successful in buying 1Y bonds at UAH 500 mln at the weighted average interest rate of 15.49% (vs. 15.95% for the same bonds a week ago). On top of that, 6M bonds were sold to 11 out of 12 bidders for UAH 474 mln at the weighted average interest rate of 16.14% (vs. 16.30% two weeks ago).

Evgeniya Akhtyrko: Obviously, MinFin “preannounced” the new interest rates for local Eurobonds, cutting out at the start those bidders who were not ready to accept significantly lower interest rates. Nevertheless, a sufficient amount of bidders agreed on the new rules of the game, which confirms the abundant supply of foreign currency on Ukraine’s market at the moment.

The demand for UAH-denominated bonds increased despite the continuing decline in interest rates. As previously, the bidders are the most interested in buying bonds with the longest maturity.

MinFin isn't planning any more placement of local Eurobonds through the end of September. The auction receipts form the placement of UAH-denominated bonds are likely to grow moderately.

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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