The Ministry of Finance, yesterday, offered the same UAH bonds as in previous weeks, but was able to borrow only UAH2.6bn—the smallest volume in over three months.
Demand for 12-month bills was the most diverse yesterday. The maximum interest rate in bids for this paper was 17.77%, 1bp below the cut-off rate of the previous auction, but most of the demand was with interest rates between 17.5% and 17.75%. Therefore, the Ministry of Finance had room to manoeuvre and decreased the cut-off rate by 3bp to 17.75%. The weighted average rate was up by 3bp to 17.68, as the bid with the maximum rate of 17.77% for UAH50m was rejected.
For 1.5-year paper, investors bid with the broadest range of interest rates—from 17.5% to 18.5%. Of course, the Ministry refused to raise the cut-off rate, rejecting the bid for UAH2,000 at 18.5%. However, demand with a rate of 17.5% did not affect the weighted average rate because, keeping the cut-off rate at the level of 18.35%, the Ministry of Finance satisfied the non-competitive demand at 18.34%, which was 3bp higher than last week.
Research team: Taras Kotovych.
See the full report here.