Government bond auction results: Budget proceeds amount to UAH2.5bn

Yesterday, the MoF decided to take another step in its ongoing efforts to bolster its relationship with the market, rejecting only a small portion of demand for the shortest-tenor, 3-month local-currency bonds with maturity on 30 May, 2012. Additionally, the MoF satisfied nearly all demand submitted for the other bonds offered yesterday, with the exception only of the 3-year, USD-denominated bond, which was offered, but not sold yesterday.

Demand for USD-denominated bonds was submitted at a total volume of US$115.06m, divided as follows: four bids were submitted for the 1.5-year bond at a total volume US$114.00m; and only US$1.06m, in two bids, was submitted for the 3-year, USD-denominated bond.

Interest rates on bids submitted for the 1.5-year, USD-denominated bond were close to the cut-off rate for the 12-month USD-denominated bond offered two weeks ago, being in the range of 9.00-9.30%, but the weighted average interest rate was 9.27%, which indicates that the majority of demand was submitted at a rate of 9.30%, or 1-2bp lower, and the MoF satisfied all demand for the bond.

Placement of the 2-year local-currency bond in yesterday\'s auction was very similar to the last successful placement of this bond on 16 February, 2012, as bids were submitted at the same level as the cut-off rate, and were fully satisfied. For the first time since 19 January, 2012, the MoF sold 12-month zero-coupon bonds, but again, at the same interest rate as two months ago.

The highest activity was seen in the 3-month bond\'s placement, where the MoF collected 26 bids, from which 23 bids were satisfied, and decreased the cut-off rate by 25bp, to 12.75%, and weighted average interest rate by 53bp, to 12.36%. At the same time, we should note that the highest interest rate for the bond was submitted at the same level as last week\'s cut-off rate.

As a result, the MoF collected UAH1.58bn and US$114.35m, or UAH0.92bn, netting UAH2.5bn of budget proceeds at the market exchange rate. These proceeds will cover all of today\'s principal and interest repayments, in local currency as well as FX.
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