Taras Kotovych, Fixed-income analyst, Investment Capital Ukraine:
This Wednesday, the NBU issued UAH1.59bn in 10-month loans to four banks for the second time since this was launched at the end of this August.
More than three months ago, the NBU issued UAH3.83bn for one year to three banks and announced that it will continue to use similar loans. But this inflow, the first in December from the NBU, did not have a significant impact on liquidity, especially when combined with the MoF's inflows of UAH1.5bn in local currency and UAH2.0bn in US dollars.
However, Wednesday’s significant inflows had a negative impact on the liquidity indicators published yesterday as banks' correspondent accounts with the NBU slid UAH0.06bn to UAH21.08bn while total debt repayments scheduled for the next 30 days fell UAH3.69bn (including only UAH1.5bn in local currency), resulting in broader banking sector liquidity declining UAH3.75bn to UAH23.14bn.
KyivPrime interest rates continued to fall yesterday: the KyivPrime ON interest rate was down 450bp to 5.5%, while the KyivPrime 1M interest rate declined 140bp to 27.0%.
Investment implications: Significant cash flows received by banks on Wednesday had no significant impact on liquidity. While large debt repayments made in FX were not included in banks' correspondent accounts, NBU loans sold on Wednesday might be not issued the same day (as they were in September), and could be accounted for either yesterday or today.