The Ministry of Finance raised UAH4.7bn (US$161m) for the budget yesterday, which refinanced only part of today's redemption. However, the MoF added a new one-and-a-half-year issue, which could help increase borrowing at higher rates.
Demand was mainly concentrated in the three-month and six-month bills, which amounted to UAH1.3bn (US$44m) and UAH3.5bn (US$114m), respectively. These bills were sold at the usual level of interest rates: 9.5% for three-month and 10% for half-year securities.
The new issue of military bills maturing in late October next year received the smallest demand yesterday. This is currently the longest maturity of military bills that the Ministry of Finance offered at primary auctions. The coupon rate was set at 11.5%, and UAH87m (US$3m) was borrowed, mainly from non-competitive bids. Most investors likely postponed the purchase of these bonds until next week, waiting for the issuer's decision on the interest rate. At the same time, the most active of them submitted non-competitive bids.
So, although only a third of today's redemptions were refinanced yesterday, it is hoped that the Ministry of Finance's steps in the form of an offering longer bills will receive a positive response from the market. We expect that as early as next week, one-and-a-half-year bills may receive much greater demand from investors who would like to diversify the terms of assistance to the government during war-time.
