For the second consecutive week, the MoF at the primary auction on Sep. 10 borrowed UAH20bn in the week. Yesterday, there were no material changes in interest rates.
The MoF rejected nearly one-third of the demand to keep the cut-off rate for 12-month bills at 14.65%. The Ministry rejected just two bids that required an increase to 14.75%. Despite total demand being below UAH1bn, the MoF demonstrated that it would not extend last week's interest rate increase for this paper.
Two and three-year securities were slightly oversubscribed, so the MoF accepted all bids, keeping cut-off rates unchanged at 15.6% and 16.6%, respectively. The MoF partially satisfied some bids within the cap. The cut-off rate for 3.5-year notes remains unchanged from last week's new level, 16.9%.
The Ministry sold all planned USD-denominated bills, US$150m, and completed last week's debt redemption refinancing. However, paper in euros saw moderate demand below the cap and tomorrow's debt redemption. The MoF may complete this redemption refinancing next week.
By combining the offer of UAH and FX-denominated bonds, the Ministry of Finance is currently attracting more than UAH20bn per week, which is only slightly less than all the funds raised during August. So, the summer lull in the bond market is over. At the same time, market activity is unlikely to lead to significant changes in interest rates in the coming weeks.
