The summer lull in the government bond market continues, and the Ministry of Finance on July 16 auction has attracted slightly below UAH5bn from UAH bonds for the second consecutive week.
Demand again concentrated on 14-month paper. The Ministry got 24 bids for UAH7.5bn vs a UAH4bn cap. Most of the demand was at interest rates below last week's cut-off rate or in non-competitive bids (satisfied at the weighted average rate). So, although the cut-off rate remained at 14.7%, the weighted average rate decreased by 4bp to 14.66%.
Interest in two-year paper decreased to UAH360m. The cut-off rate remained unchanged at 15.4%, while the weighted average rate slid by 1bp to 15.39%.
The total volume of bids for notes maturing in February 2028 increased almost threefold, but was still insignificant—UAH396m. The cut-off rate for this paper remains steady at 16.8%, with the weighted average rate up 7bp.
Investors are in no rush to buy bonds with maturities of two years or more. The acceleration of inflation in June makes it even more important to update the NBU's macro forecasts to understand what rate changes may be, at least until the end of this year.
