On July 30 primary auction, the Ministry of Finance raised UAH9.5bn, largely thanks to FX-denominated bills. However, demand remains significantly lower than supply.
Demand for 14-month bills doubled to UAH3.1bn (par value), 3/4 of the cap. Interest rates were mostly at the cut-off level of the last auction, 14.65%.
The increase in demand for two-year paper was significant. On July 30 primary auction demand was UAH2.2bn vs UAH63m a week before. However, bidders wanted higher rates, mostly 15.5% or 10bp above last week. So, the cut-off and weighted average rates are now 15.5%.
Only the demand for 3.6-year notes has mostly stayed the same. The total volume of bids amounted to UAH29.9m against UAH29.1m last week. In contrast to the two-year instrument, demand for a 3.6-year paper was more diverse, and rates in the bids resulted in a 4bp drop in the weighted average rate to 16.76%, while the cut-off rate did not change, remaining at 16.8%.
In addition, the Ministry offered USD-denominated bills. The Ministry offered US$200m USD-denominated bills, but received only US$95m of demand, mostly at 4.66%.
The Ministry of Finance raised almost US5.6bn and US$96.6m, and after two relatively weak placements, at least replenished UAH and FX accounts. Despite the absence of repayments, the budget needs large funds to finance defence and other needs that international aid cannot cover.
