Yesterday, the MoF replaced two old UAH bonds by offering new securities, but received low demand, refinancing only half of today's debt redemption.

Twelve-month bills received the largest demand yesterday, UAH2.7bn (US$71m), just UAH0.3bn less than the cap. Interest rates were mostly the same as last week, so the MoF accepted all bids and was able to borrow UAH2.9bn (US$76m).

The MoF set the cap for the new two-year paper at UAH4bn (US$105m), but received only UAH1.3bn (US$35m) of demand. All bids were accepted without changes in interest rates compared with last week's offering of 20-month bills, which was 17.6%.

The MoF offered a new 3.5-year note instead of three-year "reserve" paper, which the NBU can also add to the list of "reserve" bonds. However, demand was the smallest yesterday—UAH1.2bn (US$32m)—with interest rates mostly at 18.5%, the same as for the three-year "reserve" notes last week.


Finally, the state budget received UAH5.4bn (US$144m), covering nearly half of today's debt redemption. However, there is a high UAH debt refinancing rate YTD - 175%. But, for the MoF, it will be better to refinance redemptions immediately to avoid using tax and other budget revenues for debt repayments.

Research team: Taras Kotovych.

See the full report here.

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