For the first time since military bills were issued in March, yesterday, the Ministry of Finance offered EUR-denominated bills, and raised more than EUR143m for the budget in addition to borrowings in local currency in the amount of UAH1bn (US$33m).
This week, interest in UAH-denominated instruments decreased further and amounted to approximately UAH1bn (US$33m) at face value. This is quite understandable, because since there haven’t been redemptions for more than a month, the resources available to primary dealers and large private investors have been gradually depleted. Further, only military bills can be sold in the secondary bond market now. TTherefore, through local-currency instruments, the government attracted to the budget only UAH963m (US$33m), including UAH740m (US$25m) for seven months and another UAH223m (US$8m) for 15 months.
However, there was great demand for FX-denominated bills. Eight-month paper denominated in euros received only seven bids, but the total was EUR142m face value and brought the budget EUR143.4m or about UAH4.6bn at the current exchange rate. Bills were sold at a rate of 2.5%, similar to when this instrument was sold at the end of last year.
Such large demand can be explained by a rather large gap in offering of EUR-denominated instruments, as after a redemption of almost EUR350m in mid-February, the Ministry of Finance offered bills denominated in euros only on 22 February, when investors were very worried about news of russia's possible invasion and did not dare to buy new bonds. Nonetheless, even now, when the funds will be used for government spending during martial law, the position of investors could change, which has led to a fairly large amount of demand.