At December,9 primary auction, the MoF offered both UAH and FX-denominated bonds and borrowed almost UAH14bn, mostly in local currency. However, such distribution is the result of the limited offering of USD-denominated bills.
The MoF satisfied all bids to purchase UAH bonds as yields were usual and did not affect the cut-off and weighted average rates in any way. The one-year UAH bill provided the state budget with UAH2.8bn, the 19-month paper with less than UAH0.3bn, the two-year bond with almost UAH1.7bn, and the three-year note with almost UAH2.1bn.
As expected, there was low demand for EUR-denominated paper, resulting in budget proceeds equivalent to UAH0.7bn, with a 2bp increase in the weighted average rate to 3.24%, while the maximum satisfied rate remained unchanged at 3.25%.
At the same time, the USD-denominated paper saw 2x oversubscription - almost US$315m vs the US$150m cap. Therefore, the MoF rejected bids with high interest rates and most of the bids were accepted partially due to low supply. The Ministry of Finance reduced the cut-off rate by 5bp to 4%, and the weighted average rate decreased by 3bp to 3.98%.
The auction schedule does not include any FX-denominated bonds for the rest of the year. However, we will see two more auctions with UAH bonds only.
