This week, UAH10.7bn (US$385m) was borrowed for the budget, mostly in local currency. Nearly half of these funds will be accounted as this year's budget financing and about UAH5bn (US$180m) for current needs.
Almost half the proceeds, UAH4.9bn (US$176m), was received from five-month bills with maturity this December. These funds will be for current needs and will require refinancing in December. Such borrowings are necessary now, as today, the budget has to repay UAH14bn (US$500m) and during August debt repayments in local currency will amount to UAH30bn (US$1.1bn at the current exchange rate), in addition to repayments in hard currency.
For five-month bills, the Ministry decreased rates about to the level of the three-month bills sold a few weeks ago. Yesterday, rates for five-month bills were decreased by 64bp from last week's auction. There were just two bidders, with competitive and non-competitive bids, where non-competitive demand was insufficient.
For other instruments, the Ministry did not revise interest rates. For 11-month UAH-denominated bills, it rejected one small bid with UAH2m (US$72'000) of demand and a 10% rate. So, bills were purchased by three bidders at 9.2%.
A large portion of proceeds was provided by FX-denominated bills, which were offered for the third consecutive week. Yesterday, the same bills were offered as two weeks ago. Two weeks ago, this paper provided the budget with US$300m of proceeds, but yesterday just US$130.5m, with the rate unchanged at 3.5%.
Actually, with proceeds in hard currency, the MoF refinanced most of today's debt repayments with insufficient changes in the cost of borrowing. However, next week, the Ministry will have to increase rates slightly to refinance most of the UAH17bn (US$610m) of debt repayments in local currency, or they will have to use funds from Treasury accounts and replenish them later with borrowings at lower interest rates.