On July 11, the MoF attracted the vast majority of funds through military bonds, which again attracted considerable demand.
At Tuesday auction, almost 70% of demand was for 10-month military bills. Auction participants submitted 23 bids for this paper, which, in total, amounted to UAH11.6bn (US$316m). As the MoF set a cap for this paper at UAH10bn (US$273m), the Ministry satisfied all bids in proportion to their volume within the cap. Compared with the auction three weeks ago, interest rates for this paper slid by 20bp to 18%, similar to the one-year bills sold last week.
Smaller but still good demand was submitted for 1.5-year military paper, UAH1.4bn (US$39m) in 33 bids. Some bids were small with the same rates as last week. So, the Ministry rejected 20 bids for only UAH0.4bn (US$12m), reducing the cut-off rate by 10bp to 19.1% and the weighted average by 11bp to 19.09%.
The terms of the placement of ordinary bonds barely changed, but interest in them was also minimal—a total of seven bids for UAH135m (US$3.7m), which were fully satisfied. However, bids at 18.2% caused the weighted average rate to slide by 1bp to 18.29%, while the cut-off rate remained at 18.3%.
Demand for the "reserve" note was unanimous at 19.75%. The MoF accepted all bids, as the demand was smaller than the cap.
The total volume of yesterday's budget proceeds amounted to almost UAH13.7bn (US$373m), almost 72% of which was raised from military bonds. Some of the demand was likely from investors who received redemptions last week and were waiting for short-term bills. Similar interest in military securities last time was three weeks ago when there was a large redemption and a large part of which was immediately reinvested in a new paper.
