Yesterday, the Ministry of Finance borrowed almost UAH13bn (US$0.4bn), which refinanced most of today's redemptions and UAH-denominated debt repayments in general.
Since the beginning of the offering of military bonds, the Ministry has been issuing two-month bills with a gradual reduction of the tenor to one month. Yesterday, after a month's break, MoF offered new three-month paper. The Ministry even set the cut-off rate at 9.5%, 50bp lower than for two-month bills in early March. This paper provided the state budget with almost UAH2bn (US$66m) of funds. This amount is more than was raised in March through two-month bills.
Semi-annual securities could not compete with three-month paper, so at a rate of 10%, the Ministry sold only UAH90m (US$3m).
The longest of the military bonds—maturing in June 2023—received the most significant demand and brought the budget almost UAH11bn (US$0.4bn). Although the number of bids was relatively small, it is clear that buyers were those investors who will receive redemptions tomorrow and, in the current conditions, do not have an alternative for investing.
Therefore, given the state budget’s needs for funds for urgent expenditures during martial law, such refinancing is a positive result. And although these funds will be used to redeem old bonds, including two-month military bills placed in March, the government will have to use significantly fewer funds received through tax payments for debt repayments.