The Ministry of Finance sold only two bills yesterday and raised just a mere UAH66m. Demand was a little higher, but the MoF decided not to raise the cut-off rate on the 11-month paper.
For five-month bills, all demand was at a rate of 11.6%, which was 10bp higher than at the beginning of the month. These bills brought UAH55m to the budget. However, 11-month bills received bids amounted to UAH16m with rates ranging from 11.93% to 12.1%. Therefore, the Ministry decided that raising the rate for UAH5m was not worth it, so it kept both the cut-off and the weighted average rate at the same level as last week, 12% and 11.93%, respectively.
The Ministry of Finance decided not to offer the rest of the bond issues that were scheduled for yesterday. Obviously, there was no demand for them, and if there had been, it could be too expensive under current conditions.
Fortunately, it appears that budget revenues are sufficient to meet current budget expenditures, including debt payments.
Sentiment in the bond markets has deteriorated due to the threat of a Russian invasion in the near future, which discourages investors. Therefore, borrowing in the near term may continue to be difficult until there is some reassurance that the situation at the eastern border has improved and information flow is more positive in general.
