October’s debut auction provided the state budget with almost UAH2.5bn (US$93m) of proceeds at mostly constant interest rates.
Yesterday, the Ministry of Finance raised the cut-off and the weighted-average rates for only the five-year note by 16bp, bringing them closer to the overall level of the primary market curve. The rest of the offered securities received the same rates as last week.
This actually finalized the rate hike that began in September. Compared with August, the cut-off rates mostly increased by 16-35bp, and for the shortest maturities — three and six-months bills — by 108bp and 70bp, respectively, over the last time they were sold, which was in early summer.
Last week, in general, such an increase in rates helped to partially refinance debt redemptions. But today and in the coming weeks, there will be no redemptions, so all borrowings are, in fact, new funding and will improve budget financing.
Bonds with maturities of one to two years were in the greatest demand yesterday, bringing a total of almost UAH2.1bn (US$79m) to the budget. Investors were least interested in the seven-month and three-year securities. There was no hype over the five-year bonds, although the MoF rejected part of demand due to excessively high rates in the bids.