Government bond auction results: New 7-year local-currency bond sold

Yesterday\'s auction continued the series of auctions with \"friendly\" demand for government bonds under non-market conditions, and from the four local-currency bonds offered yesterday, only one received any bids, the new, 7-year local-currency bond which the MoF launched yesterday to replace a similar bond sold this Tuesday and previously in May and June.

Only one bid amounting to UAH500.0m was submitted yesterday at the auction, for the 7-year bond, with an interest rate of 14.13%, the same level as the cut-off interest rate this Tuesday. As a result, the MoF accepted this bid and will receive UAH503.01m of budget proceeds today.

These revenues complete the UAH1.04bn attracted this Tuesday from the refinancing of debt principal and interest repayments, but more than UAH1.0bn was not refinanced this week. The next primary auction is scheduled for next Wednesday, with a payment date set for next Thursday, so funds received today will be not enough for the debt repayment amounting to UAH1.86bn, even taking into account that UAH0.79bn (or US$93.27m) has to be paid in USD-denominated bonds\' principal and interest repayments.

As a result, next week, we could see moderate demand for USD-denominated bonds, but it will be significantly lower than the volume of debt repayments in FX, and the usual \"friendly\" demand for 5-year and 7-year bonds. Insignificant market demand could also be seen for the 3-year, USD-indexed bond.
Read full comment in the attachment (5 pages, PDF file 506KB)