Emphasis again on FX

On Tuesday, Dec. 20, the Ministry of Finance was able to raise UAH13.6bn for the budget, and more than half of it was in hard currency.

UAH bonds received good demand for UAH6.5bn (par value) and USD-denominated bills—almost US$210m. But not all demand was satisfied in full.

Short-term bills with a maturity of up to one year again saw bids at significantly higher rates than the rest of demand, but with relatively small volume. So, the MoF rejected one small bid for six-month paper, and the entire demand for 11-month securities was rejected. But longer UAH bonds with maturities of one to two years were sold to all bidders.

It was FX-denominated bills that brought the most funds. It seems that the Ministry of Finance decided to replenish FX accounts before the repayment of US$360m today and refinanced more than half of this payment. Another auction that will offer USD-denominated bills will take place next week, so there is a high probability that this repayment will be refinanced in full or nearly.


At the same time, there was no increase in interest rates for any of the securities, and requests for higher rates were rejected. We do not expect new rate increases for the rest of 2022.

 RESEARCH TEAM: Taras Kotovych

See full report here.

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