At July 1 primary auction, for the second time, the MoF borrowed UAH7bn. In contrast to previous auctions, most of the funds came from a 3.5-year note.
The shortest paper, the 15-month military bills, received the lowest demand in four weeks. Demand amounted to UAH0.9bn with the same interest rates. The MoF accepted all bids.
Ten bids for UAH1.1bn with 17.1% yields were received for the new 21-month paper, and the MoF accepted all these bids.
At the same time, the MoF received 1.5x oversubscription for the 3.5-year note. There was either one or a few big buyers. As a week before, the MoF received 28 bids, while at July 1, it received just 12 bids.
According to the rules, the MoF fully satisfied non-competitive demand and bids with rates below the cut-off level. The remaining bids the MoF accepted partially, satisfying about 65% of each bid.
Huge demand from a small number of bidders could have been situational, as this was the smallest number of bids in five weeks. On the other hand, it could have been demand from a few large investors who expect interest rates to decline soon prior to the NBU's switch to easing monetary policy.
