Funds borrowed yesterday should allow the MoF to cover most debt repayments scheduled for today, especially in local currency. At the same time, interest rates remained steady.
In this auction, demand was concentrated in short-term bills. Out of UAH7.5bn of demand, only UAH0.3bn was for 1.5-year bills, while most of demand was submitted for bills with tenors of less than one year. Nearly one-third of demand was for 12-month bills. A bit less than a half of demand was for three-month bills. This redistribution of demand to zero-coupon bills could be the result of offering only bills with up to 1.5-year maturities, and not offering the two-year bills, which had large demand in recent weeks. By the way, the budget received UAH6.8bn of proceeds in hryvnia, which covered all debt repayments in local currency scheduled for today.
For FX-denominated bills, the MoF borrowed US$122m, which covered most of today’s debt repayments, which amounted to US$137.6m. So, for this repayment, the MoF is likely to use borrowings from last week’s auction, when there were no debt repayments in FX.
So, the total amount of borrowing remains at a level sufficient to cover debt repayments, and the maturity of new bills continues to increase. Despite instability in demand and migration from short-term to medium-term bills and back again, there was enough demand to provide longer funds for the Ministry than there was at the end of last year.
Next week, we should see a similar situation. According to the auction schedule, the MoF will offer two-year bills, and demand could be enough to cover all debt repayments in local currency. Next week there will be repayments in US$ and Euro, their amount will be similar to this week’s repayments. The MoF is scheduled to offer bills in all currencies that are needed for repayments.