Banks' need for "reserve" bonds remains, and they continue to buy new bills, but in much smaller volumes than at the beginning of the year.
At yesterday's auction, the MoF offered only three UAH bills, two of which were military securities, and the third was a "reserve" bond maturing in April 2025. Military bills were offered with a maturity of 11 and 15 months, and the demand for them was almost unanimous. MoF rejected only one bid with a 19% interest rate for a shorter tenor, which was 50bp higher than the rates in the remaining competitive bids.
The demand for "reserve" bonds was also unanimous. Last week for this paper, there was large portion of demand with a rate of 18.7%, which caused the weighted average rate to drop to 18.98%. Yesterday, all the demand was submitted with a rate of 19.6%. But the placement volume increased slightly compared with previous weeks, up to UAH3.8bn, which increased the total volume of "reserve" bonds to UAH96bn.
On the eve of large debt redemption, the Ministry of Finance attracted only UAH4.6bn, which is slightly more than a quarter of the UAH redemption planned for today. Taking into account that in 1Q23 net borrowings are UAH44bn, this should be fine for the budget and to meet the IMF program goals for the full refinancing of domestic debt payments.
