Interest rates declined only for the shortest bills, which the MoF has been offering with a cap. For the rest of the instruments sold yesterday, changes in rates were insufficient.
A cap for the three-month paper once more induced bidders to submit bids with lower rates. Yesterday, the MoF accepted just the lowest rate, 7.98%, which declined by 36bp compared with the auction two weeks ago. The same level was set for the weighted average rate, which was down by 35bp.
Most of bills did not see changes in rates. Only the two-year saw material changes. Both the cut-off and weighted-average rates were up 10bp to 11.8%, the same level seen two weeks ago.
Rates for the FX-denominated bills were also unchanged. Twelve-month bills were sold at 3.7% and two-year paper at 3.9%, the same levels as earlier this month.
If we assess the acceptance rate of demand, in general, it remained at a high level, almost 90%. Due to the cap, the Ministry rejected a large portion of demand for the three-month bills, and one bid for 12-month and two-year bills, each.
Therefore, in general, the budget received almost UAH8.9bn (US$318m), of which UAH4.5bn (US$162m) was in hryvnia and another US$156m (UAH4.4bn) in hard currency. Although in general, more hard currency was raised this month than was needed for redemptions, this difference almost completely compensated for insufficient borrowings in hryvnia. As a result, the MoF was able to refinance almost 100% of domestic debt redemptions in March, without increasing the cost of borrowing, and even slightly reducing it.