By raising rates a little more, the Ministry of Finance borrowed almost UAH7bn yesterday, and even then not all received demand was satisfied.
Of course, it would be impossible to increase borrowings without an increase in demand, and yesterday total demand exceeded UAH7.4bn. Only a small part of it, UAH0.3bn, was rejected. The MoF did not find the interest rates in all bids suitable, especially for two and three-year securities.
The shortest paper yesterday was with 11-month maturity, for which demand was almost unanimous at 11.5%. Only a small portion came in at 11.49%, which did not affect the weighted average rate of this placement.
Bids for the three-year note were near unanimous also, and they were mostly satisfied by the Ministry of Finance. The cut-off rate remained unchanged at 12.49%, while the weighted average rate slid a mere 2bp to 12.47%.
However, the rest of the instruments sold yesterday received higher rates than previously.
Interest rates continued to rise on notes maturing in November 2022 and the next year. Thus, for the 14-month paper, the cut-off rate was up by an additional 10bp to 11.6%, and the weighted average by 11bp up to 11.58%. For two-year bills, the growth of rates slowed: the cut-off rate was up by 6bp up to 11.40%, and the weighted average by 5bp up to 12.39%.
The rate on six-year note rose the most, but the last time they were placed was a month ago, and there may have been pent-up demand. The cut-off rate for this paper immediately increased by 29bp, and the weighted average by 26bp, to 13.04% and 13.01%, respectively.
Thus, due to more expensive but larger demand, the Ministry was able to borrow almost UAH7bn in one go, which is almost three times more than from last week’s UAH-denominated bills. This allowed the MoF to refinance more than a half of today's redemptions in local currency. In general, net local-currency financing of the state budget has slightly improved YTD compared with the results of the first eight months of this year.