Even without caps and higher rates, the Ministry of Finance would not have been able to refinance all of today's payments. Bidders did not receive a decision that increased interest rates; in fact, rates dropped for some issues.
Of course, the largest decline was in semi-annual bills. They were more than twice oversubscribed, so the reduction in rates was considerable. The cut-off rate decreased by 47 bp to 8.68%, and the weighted average was down by 44 bp to 8.59%.
Rates for the two-year paper declined, too. All competitive demand was at 11.7%, therefore, the Ministry had to accept all bids, including non-competitive, at this level, which is 10bp below the rates set a week ago.
For other offered bills and notes yesterday, rates mostly remained steady. Rates rose only for the one-year and 1.5-year instruments, with weighted-average rates up by a mere 1bp and 2bp, respectively, to the same level as the cut-off rates. But for these bills, the Ministry decided to reject some small and expensive bids to avoid increasing interest rates.
So, in general, the Ministry refinanced about half of todays' debt repayments in local-currency debt. But this partial refinancing do not cause any problems for the state budget.
In January and February, the government borrowed net UAH22bn (US$0.8bn) and during the previous two weeks, there were outflows to budget accounts and inflows to the banking system in nearly equal amounts, UAH15.2bn and 16.6bn, respectively. So, there are enough funds in budget accounts to make at least this week's debt repayments without full refinancing.