Government bond auction results: Eurobond redemption refinancing

Yesterday, the MoF held a primary auction which was typical for the last month\'s procedure: it initially announced an offering of bonds according to schedule, but then announced additional offerings. Originally on Wednesday, four local-currency bond offerings were announced, but yesterday, the Ministry announced the offering of four USD-denominated bonds, two with 13-month, 2-year maturities, and two with 3-year maturities, with one of the 3-year bonds puttable. But later on in the day, the MoF announced the offering of a 3-year, EUR-denominated, puttable bond, in addition to the previously announced bonds, and after bids were received for these, a new, additional auction was announced for yesterday, with an offering of only one 3-year, USD-denominated bond. Such activity by the MoF\'s seems to be the result of negotiations with probable investors, to refinance the Eurobond UKRAIN 6.385% \'12 redemption and interest repayments scheduled for the next Tuesday.

Taking into account the possibility of these negotiations, it is easy to assume that demand was mainly submitted at yesterday\'s auction from \"friendly,\" or state-owned banks, especially for bonds with maturities of 3-7 years. Of the total demand collected yesterday, only five bids amounting to US$96.4m were submitted for the 13-month, USD-denominated bonds, or only 16.53% out of the entire demand for the USD-denominated bonds; the 10.5-month, local-currency bonds did not see any demand.

As a result, the MoF will receive UAH1.51bn, ?40.25m, and US$591.87m of budget proceeds. And, while funds in local currency will be most likely used for budget expenditures, funds in US dollars will be used for the UKRAIN 6.385% \'12, amounting to about US$516m.
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