On Dec. 12, the Ministry of Finance raised UAH5.2bn from the primary auction almost without changes in interest rates.
The most significant demand was for 11-month bills, as expected. The MoF received 26 bids for UAH10bn and accepted 25 of them, selling only UAH4bn of bonds. The Ministry likely satisfied fully non-competitive demand at 16.88% (only 4bp lower than last week) for UAH3.4bn and competitive bids with rates below the cut-off rate of 16.9%. Bids at 16.9% were partially satisfied within the rest of the cap. The MoF rejected only one bid with a 16.97% interest rate.
At the same time, longer maturities again received low demand, just UAH1.7bn. Bids mostly had interest rates similar to last week's auction and were fully satisfied. The MoF sold the two-year paper for UAH690m with an unchanged cut-off rate of 17.6% and an increase of the weighted average rate of 1bp to 17.59%. At the same time, the Ministry placed three-year "reserve" notes for almost UAH994m, keeping both the cut-off rate and the weighted average at 18.6%.
Auction demonstrated that the market had already evaluated all the NBU's previous decisions on the key policy rate, and factored in its announced plans to lower the rate in December by another 100bp to 15%. Market participants were in no hurry to buy longer instruments, seeking first to receive new indicators from the NBU for 2024 tomorrow, especially given the current uncertainty regarding external financing for next year and the recent weakening of the hryvnia exchange rate.
