This week, the MoF reacted to the higher rates in demand for UAH-denominated instruments, and rates rose for more issues.
The largest increases in interest rates were for longer maturities. For two-year bills, rates were up by 25bp to 12.34%, and for the three-year note by 19bp to 12.49%.
Earlier this month, the MoF increased rates to 12.45% for the three-year note, which just last week had been decreased to 12.3%. So, for three-year paper, the increase was just 4bp.
Interest rates were also up for 12-month paper. The cut-off rate was up by 5bp and the weighted-average rate by 12bp, which is in addition to last week’s increase. Yesterday, the cut-off rate for this paper was the same as for 14-month paper, which was sold yesterday at the same cut-off rate of 11.5%, while the weighted-average rate was 2bp lower than for the12-month bills.
There was a decline in rates for some bills. The five-month bills were sold at 9.7%, or 10bp lower than two weeks ago. Demand came with rates up to 11.45%, but two out of four bids were rejected.
Almost half of the proceeds were received from USD-denominated bills, which were sold at the usual 3.9% rate. Demand was lower than at the end of August, but this offering provided the budget with US$87m (UAH2.3bn).
In total, the MoF received UAH5bn (US$187m) for the budget including UAH2.7bn (US$101m) in local currency. Actually, proceeds in local currency more than doubled. But without an increase in rates, borrowings would have been lower, close to this year’s minimum, which likely was not suitable for the MoF.
