Yesterday, the Ministry of Finance returned half-year bills to its offerings, but this did not result in increased borrowing. On the contrary, demand fell by almost half and become more expensive.
After a break of almost three months, the Ministry again offered half-year bills, this time with redemption next year, so as to not increase this year's need for refinancing. Nevertheless, demand for them was very restrained, with only UAH136m in eight bids with rates ranging from 9.5% to 11.15%. Under the circumstances, the issuer decided to satisfy only five bids with rates ranging from 9.5% to 9.8% for the amount of only UAH34m.
The placement of one-year, two-year, and five-year bonds was similar. Most of demand was rejected due to high bid rates.
Only the one-and-a-half-year securities received decent demand, which was over a billion hryvnias in four bids. All were at the rate of 11.3%, so they were satisfied in full. Demand for three-year paper was also fully accepted.
It was these bonds that brought the vast majority of proceeds out of the UAH1.4bn borrowed yesterday.
As expected, the issuer's decision last week to raise rates on three-year bonds was the reason that four out of the six bonds offered yesterday received bids with higher rates than last time. And if for six months bills the Ministry agreed to raise rates, for others it maintained the level of previous weeks.
With no particular need for financing the budget deficit, the Ministry of Finance has so far refrained from raising rates on most offered maturities. This time, the rate was raised only for the shortest maturity, bringing it closer to the current level of the yield curve and pending the decision of the NBU on the key policy rate tomorrow.