The Ministry of Finance on Dec., 5 raised almost UAH12bn, mainly in local currency, lowering the rates for most offered bonds.
After a month of placing semi-annual bills, the MoF returned one-year paper to the offerings. The demand was 2x larger than the cap, so only 16 out of 27 bids were satisfied, and the rates were set at 16.92%. Compared with the previous placement of a similar instrument in October, the cut-off rate decreased by 38bp, and the weighted average fell by 35bp.
Demand for the two-year instrument was only slightly less than the supply, so it was fully satisfied. Thanks to lower rates in bids, the cut-off rate declined by 10bp to 17.6%, and the average weighted rate slid by 6bp to 17.58%.
Only interest rates for three-year notes did not change. Almost all demand was at the rate of 18.6%, the same as last week, even less than the supply. Therefore, the MoF satisfied it fully.
Once again, the reduction of interest rates included FX-denominated bills. The cut-off rate slid by 4bp to 4.66%, and the weighted average rate declined by 6bp to 4.6%. The Ministry of Finance rejected eight bids and could partially satisfy some bids within the cap after meeting bids with lower yields.
The tendency to lower rates continues, although placement participants are in no hurry to push the Ministry of Finance to even lower rates on three-year bonds. So, the difference in rates between short and long instruments gradually widens as investors increasingly compete for bonds with shorter maturities.
