The Ministry of Finance attracted to the budget UAH3.6bn (US$98.5m) yesterday, almost all thanks to FX-denominated bills with interest rate hikes.
UAH bills have traditionally received small and mostly unanimous demand. There was only one bid for the 1.5-year bills with a 19% rate that amounted to UAH4m (US$0.1m), which was almost 45% of the demand for this paper. But the Ministry of Finance rejected it and kept the rates for military government securities unchanged at 12-16% with a maturity of six to 18 months.
There was another increase in interest rates on USD-denominated bills. Seven-month paper, which recently saw an increase in rate by 50bp to 4%, received another increase of 25bp to 4.25% yesterday. Thanks to the readiness of the Ministry of Finance to raise rates, it was possible to attract US$98.2m, or almost 100% of yesterday's funds.
So, on the eve of the large redemption of USD-denominated securities, the Ministry of Finance agreed to a higher rate and refinanced more than half of tomorrow's repayment in hard currency. At the same time, the refinancing of UAH redemptions continues to deteriorate as with today's redemption of UAH16bn (US$0.4bn) only UAH11.8m US$0.3m is borrowed.
