Government bond auction results: Auction cancelled due to lack of demand

The MoF\'s offering of 5-year and 7-year bonds this month, according to the auctions schedule, is an indicator of the technical character of these auctions and the current lack of necessity to receive funds from the market. If the MoF does need to attract some funds for budget financing, we will likely see friendly demand from state-owned banks or other banks, with the NBU\'s support.

Today, the Ministry has to make UAH0.98bn in debt principal and interest repayments, including UAH0.78bn of zero-coupon bonds outstanding, issued at the beginning of this year. As a result, by offering attractive interest rates and maturities to the market, the MoF could partially refinance this repayment. But, for the MoF\'s purposes, it is more sensible, as in today\'s case, to use FX funds received from Eurobonds issue in July to cover current debt repayments.

At the same time, the next primary auction will precede the large principal repayments coming up on VAT bonds, which will be amount to UAH1.64bn in total and will be paid in installments over the course of three days. These repayments will need partial refinancing, which will most likely be done on 28 August, instead of next week, to increase the level of fund reserves in local currency in government accounts.
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