Yesterday, the MoF increased borrowings nearly three times compared with last week, selling just one bill with a 13-month maturity. The offer for eight-month bills was cancelled.
The one bid the MoF received for the eight-month bill amounted to UAh53m (US$1.9m) with a 10% interest rate; it was rejected.
However, there was considerable demand for 13-month bills. Eleven bids amounted to UAH2.8bn with rates ranging between 9.1% and 11.5%; non-competitive demand was only UAH10.7m. Of course, a significant increase in rates from the Ministry of Finance was not expected; however, the cut-off and weighted-average rates were both increased by 9bp to 9.29%.
This increase allowed the MoF to accept six out of 11 bids or 91% of demand at par value. Proceeds amounted to UAH2.8bn or three time more than the week before from a combination of local-currency and FX-denominated bills.
It is expected that demand in September will become a bit more active after quarterly and month-end tax payments end, with banking sector liquidity remaining at UAH160bn. Nonetheless, interest in the primary is auction still low.