Yield curve of UAH-denominated domestic government bonds placed during past two auctions
Yesterday, the Ministry of Finance offered what has become the typical set of bonds in recent weeks, but investors returned to buying two-year instruments.
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As expected, the new issue of one-year (actually 14-month) bonds received considerable demand for the shortest paper offered at the auction. But it was less than the cap for the second consecutive week. The MoF rejected seven out of 29 bids to keep the cut-off rate unchanged at 14.74%, while the weighted-average rate increased by 1bp to 14.72%.
Yesterday, investors preferred to buy two-year bills. Demand almost doubled compared with the previous week to UAH4.7bn. The MoF satisfied all bids, some partially to stay within the cap of UAH4bn. The cut-off rate remained at 15.4% for the third week in a row, but the weighted average rate continued to rise and was 15.36% yesterday, which was 4bp higher than last week.
Three-year notes continue to see demand, but lower than the cap. Yesterday, the MoF received 18 bids for UAH1.8bn. Interest rates were mostly 16.8%, so both the cut-off and weighted average rates remain unchanged.
In total, the Ministry attracted UAH9.4bn yesterday, which almost completely covers today's debt repayment. This is a good result, considering that investors are not in a hurry to buy many new bonds without understanding how the NBU will change its macro forecast and whether it will predict a further decrease in the key policy rate and rates on CDs.
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