On October 1 primary auction, the MoF offered six UAH bonds. Borrowings, as usual, were above UAH10bn without material changes in interest rates.
Generally, we can divide the bond offering into two categories, one for issues targeted for for small investors, primarily retail and banks.
Bonds "for banks" are two and three-year paper that the NBU can add to the list of bonds permitted to cover required reserves. Two-year bills received UAH5.8bn demand vs the UAH5bn cap. Demand was mostly at a 15.6% rate, so the cut-off and weighted average rates remain unchanged.
Similar was the placement of three-year notes, which was twice oversubscribed. Bids had interest rates not higher than 16.6%, a recent cut-off rate, but the cap was exhausted at 16.59%, moving the cut-off and weighted-average rates 1bp down to 16.59%.
Demand for 12-month bills was UAH1.5 bn, and the MoF accepted all bids, keeping the cut-off rate at 14.65%. Similarly, for a 3.5-year paper, the MoF accepted all bids at 16.8%.
The most interesting offerings were the 1.5 and 2.5-year instruments. The MoF set interest rates at a 45bp premium to 12-month bills for 1.5-year paper and a 50bp premium to two-year bills for 2.5-year securities.
