On Nov. 26 primary auction the MoF borrowed UAH19bn in UAH-denominated bonds.
Military bonds were 3x oversubscribed, but without any chance of decreasing interest rates. Most of the bonds the MoF sold were at last week's cut-off rate, 15.2% and 16.19% for 1.5 and 2.5-year paper.
The MoF sold three-year notes at the usual 16.8% interest rate.
However, auction participants were most interested in the new 3.5-year paper. The MoF will probably make them the reserve eligible, but the final decision rests with the NBU.
Significant demand allowed the MoF to set the coupon rate at 16.01%, and the cut-off rate was 16.25%.
Offering reserve bonds may cover extra budget needs in November, and we could see additional interest rate cuts in the following weeks.
