Once again, at yesterday’s auction the MoF was only able to refinance part of the debt repayments scheduled for the current week, and again, for FX-denominated bills. In total, the MoF borrowed UAH4.7bn, including UAH3.6bn in FX-denominated bills.
Once again, at yesterday’s auction the MoF was only able to refinance part of the debt repayments scheduled for the current week, and again, for FX-denominated bills. In total, the MoF borrowed UAH4.7bn, including UAH3.6bn in FX-denominated bills. Demand for local-currency bills remained low, but this week it was up more than double to UAH1.1bn. Most was concentrated in bills up to six-month maturities, although nearly a quarter was for two-year paper. This is very important, as at the end of last year, the MoF did not offer these maturities due lack of demand for it. This week’s borrowings in local currency will be enough to cover repayments, and also to improve the balances in budget accounts.
But for FX-denominated bills, things are less positive. Once more, demand for these bills is lower than budget requirements for FX. Due to the steady hryvnia exchange rate, these bills are still less attractive than local-currency bills due to the significant difference in interest rates.
But for FX-denominated bills, things are less positive. Once more, demand for these bills is lower than budget requirements for FX. Due to the steady hryvnia exchange rate, these bills are still less attractive than local-currency bills due to the significant difference in interest rates. This week, the MoF did not offer bills in FX with maturity less than one month, and this decision was positive. Instead, they offered bills with maturities from four months and up to two years, but collected only US$140m of demand, or about one-third of this week’s repayments.
Therefore, we see a low level of domestic FX-denominated repayments, similar to last year. In January 2018, demand for these instruments was low, and in February 2018, the MoF did not offer these bills at all. But demand for FX-denominated bills rose in 2H18, when the hryvnia weakened. Low proceeds in FX decrease the FX balance in government accounts, and make new loans under WB guarantee necessary to cover future debt repayments.
THIS REPORT HAS EXCLUSIVELY INFORMATIONAL PURPOSE.
