Yesterday, the Ministry of Finance significantly increased the amount of proceeds in both local and foreign currencies. At the same time, cut-off rates remained unchanged with insufficient movements of weighted-average rates.
The most important result was the issuance of FX-denominated bills. This week, redemption of US$113m of bills that were issued at the end of February 2019, falls due. At least a partial refinancing of this redemption will be covered by yesterday's proceeds, especially since weekly proceeds of US$8-10m has been the norm recently. Also important was increasing the maturity to at least a few months.
The Ministry offered three US$-denominated bills with 3-month, 11-month, and 2-year maturities. In total, the Ministry accepted US$86m of demand, including US$82m for three-month bills. US$85m of proceeds allowed the Ministry to refinance 75% of this week's FX repayments.
The local-currency part of yesterday's auction was very active. Keeping the key policy rate unchanged at 18% for the next six weeks increased demand for both three-month bills and for longer maturities. Cut-off rates remained unchanged, although for some, the weighted-average rates slid by a mere 1-2bp, which could be the result of large demand.
Demand for bills with maturities longer than a year remained high, with only slight decline of its share compared with last week. Yesterday, it was 37% of total demand for UAH-denominated bills, which was concentrated in the two-year maturity. In nominal terms, this was more than double compared with last week.
The Ministry rejected a small portion of demand for eight-month and three-year bills, which had insufficient impact on total proceeds. Rejected bids had rates 50-175bp above cut-off rates with insufficient amounts.
The Ministry was able to improve its position in FX, and was able to borrow a large amount in hryvnia prior large repayments scheduled for next week and the beginning of April. High demand at current rates should help the MoF refinance payments. An increase in borrowings from medium-term instruments should improve the schedule of domestic debt repayments.