The Ministry of Finance raised more than UAH7bn (US$242m) through military bills yesterday, mainly through UAH-denominated bonds. But demand for FX-denominated bills was also strong.
Yesterday, the largest demand was for 14-month securities, which came in above UAH4bn (US$137m) at face value, and provided state budget with UAH4.2bn (US$142m), or almost 60% of all borrowed funds. The state budget received another UAH0.8bn (US$28m) and UAH0.6bn (US$21m) from three-month and semi-annual instruments respectively.
Currently, domestic investors are most interested in military bills with the longest tenor with an interest rate of 11%, in contrast to shorter maturities that offer yields of 9.5% and 10%, respectively.
In total, UAH-denominated securities provided the state budget with UAH5.6bn (US$192m), which covers the government's need to pay income on UAH-denominated bonds today and offsets part of budget expenditures for debt servicing earlier this year.
Investors were interested in FX-denominated bills, too. After partial refinancing of debt repayments in hard currency two weeks ago, FX liquidity in the market is still high and was gradually absorbed by the Ministry of Finance to cover critical budget expenditures during wartime.
Another US$50m was borrowed yesterday in addition to US$82m raised two weeks ago, which, together, now cover almost a third of USD-denominated repayments made in April.
Domestic funding remains at the usual level, averaging about UAH6.5bn (US$220m) per week. Such borrowings, of course, do not cover the government's need to cover the budget deficit during wartime. However, it indicates that at least UAH-denominated redemptions can be refinanced thanks to the activity of banks and other domestic investors.
