ICU Weekly Insight, 18 October 2023 - Bond Rates Mostly Unchanged

The Ministry of Finance raised UAH9.2bn yesterday from three UAH bond issues with minor interest rate changes.

Rates for twelve-month bills changed the most. Demand for this paper slightly exceeded UAH1bn, with interest rates no higher than 17.53%, which was just 2bp lower than last week's cut-off rate. The Ministry satisfied all bids, setting the cut-off and the weighted average rate at 17.53%.

For securities maturing in June 2025, bids were similar to last week, with rates ranging from 18.15% to 18.35%. Since demand was larger than the cap, the MoF accepted all bids, but some with the maximum rate were only partially satisfied within the cap. Interest rates remained unchanged at 18.35%.

The most significant demand was for three-year notes. While the MoF set the cap at UAH5bn, demand amounted to almost UAH6.6bn with rates between 19.10‒19.19%, but mostly closer to the maximum. Therefore, part of the bids was partially accepted within the cap proportionate to the bid size.

UAH borrowings remain close to UAH10bn and are primarily from three-year government notes, which may become eligible to be used as "reserve". At the same time, bond rates changed marginally and mainly remained unchanged for the second month.

Research team: Taras Kotovych.

See the full report here.