Yesterday's auction did not bring in much in terms of demand nor budget proceeds, not even close to previous weeks. But that did not stop the MoF from continuing to lower interest rates for local-currency paper.
Only bills with maturities of 10.5 months received demand higher than what was offered in yesterday's auction. Out of UAH579.6m of demand, only UAH79.6m was not accepted to meet the cap for this auction. The cut-off rate was set at the maximum bid level, so some participants received only part of the requested volume. Both the cut-off and weighted-average rates were reduced at the request of investors: by 25 bp to 13.55%, and 28 bp to 13.46%, respectively.
For three-month bills, demand was less than half from cap, just UAH133.8m. The MoF rejected two bids amounting to UAH12.3m, decreasing both the cut-off and weighted-average rates by 40bp to 13.95%.
However, two-year bills did not receive enough demand, which came in almost three times less than the offered volume. It was also significantly less than the three-year and four-year notes offered earlier this month. However, this did not prevent the MoF from reducing the cut-off and the weighted-average rates to 13.5%, by 119 bp and 114 bp respectively compared with the end of October.
Foreigners have not been interested in two-year bills ahead of the expected issue of four-year notes next week and similar instruments in December. So this time, they took a pause in submitting demand for the auction, which allowed the MoF to only partially refinance today's domestic debt payments.