May 5 primary auction results. With this auction, the Ministry of Finance completed the refinancing of FX-denominated bonds redeemed in April and refused to raise the yields on UAH instruments.
The key event was the offering of USD-denominated bills. The MoF offered another US$100m in bonds, in addition to the US$100m placed last week. Demand decreased slightly from a 2.1 bid-to-cover to 1.5, but it still left the Ministry of Finance with room for manoeuvre. The offer was exhausted when the bid rate reached 3.15% (9 bp below last week). Taking into account the minimum rate of 2.8%, the weighted average rate was set at 3.05%, or down 8bp WoW.
At the same time, UAH bonds saw almost no change in interest rates. The Ministry of Finance rejected bids with rates above the cut-off rates of previous auctions for both UAH instruments. However, the weighted average rates changed slightly: for 15-month bills, the weighted average rate increased by 2bp to 15.14%, and for the two-year instrument, it slid by 1bp to 15.85%.
To do this, the Ministry of Finance rejected 8% of the demand for 15-month securities and almost 30% of the demand for two-year paper, because some bidders sought to raise rates by 25-33bp. However, for the ministry, the volume of demand at such rates was not at all important that it would make such concessions.
