The MoF held a primary bond auction for the first time after changes in the government and as the risk of spreading the COVID-19 increases. It borrowed US$71.6m or UAH1.9bn, which was a quite positive result given current conditions.
Total demand fell nearly three times compared with the last time USD-denominated bills were offered, which was in February. Yesterday, demand was US$78.8m at par value. Interest rates in demand rose to 9%, but three bids with rates above the cut-off level were small, together just US$5.2m. So, the Ministry accepted 13 out of 16 bids in the amount of US$73.6m, and borrowed US$71.6m.
The cut-off rate was set at 3.5%, the same as in February, but the weighted-average rate rose by 11bp to 3.5%.
The Ministry did not offer any UAH-denominated paper. Most likely, there was not any demand for these instruments, or possibly the level of interest rates was above secondary market rates. Therefore, the break in offering UAH-denominated bills continues, and the Ministry continues to offer FX-denominated paper.
During crisis periods, new issues usually are not successful, but currently, demand for FX-denominated paper persists. Low demand can be the result of lack of repayments on the same instruments. The next debt repayments in FX are scheduled for April, and until then, issues of new FX-denominated paper will likely be inactive.
