Page 61 - UKRRptJul20

Foreign holdings of Ukraine government hryvnia bonds have decreased by 15% since the start of this year​, to the equivalent of $3.75bn, reports the National Bank of Ukraine. Last year, foreign holdings increased 18-fold, to $4.3bn on Dec. 31.
Backed by the new, low prime rate, cut in June, the Finance Ministry was able to place short term hryvnia government bonds at record lows on June 23: 7.24% for three-month securities and 7.71% for six-month securities. Two weeks earlier, the central bank cut Ukraine’s prime rate from 8% to 6%. In Tuesday’s weekly bond auction, 2-year bonds sold for yields at 10.5% and 3-year-bonds at 10.6%. The biggest drops were on two maturities not sold last week - 1-year bonds dropped by 100 basis points and 9-month bonds dropped by 80 basis points. Placements of the six issues raised the hryvnia equivalent of $234mn, the Finance Ministry writes on Facebook.
After the IMF deal, Ukraine’s market indicators were returning to pre-corona crisis levels, but that is expected to change following the departure of NBU governor Yakiv Smolii​. The yield on Ukraine’s 12-year sovereign bond has fell to 6.7% in the second week of June as the IMF tranche arrived, the level of January. In late March, it spiked to near 12%. The price of GDP warrants fell to almost 50 in April. Now they are around 75, the level of last August. In the wider Emerging Market universe, Barclays $High Yield EM Index, based on about 700 bonds, fell 23% in March. It has recovered 21.5% to near the level of December.
The Finance Ministry cut yields on short term hryvnia debt at June 9 auction in anticipation of a NBU rate cute on June 10 weekly auction. The 3-month debt dropped from 9.9% per annum to 9%. The 6-month debt fell from 10.27% to 9.5%. The 9- and 12-month issues fell slightly, from 10.89% to 10.79-10.8%. For the first time since late February, just before the coronavirus crisis, the Ministry auctioned 18-month bonds, selling $215mn in equivalent with a yield of 10.8%.
One week after the central bank lowered Ukraine’s prime rate from 8% to 6%, the Finance Ministry pushed down yields on short term bonds​. At June 16 weekly auction, yields on 3-month bonds fell from 9% to 7.5%. Yields on 6-month bonds fell from 9.5% to 8%. For the first time since February, the Ministry auctioned 2- and 3-year bonds. June 16, yields fell back toward the pre-crisis levels of 10%. The 2-year bonds carried 10.6% per annum yields, and the 3-year bonds carried 10.8% per annum yields. The auctions netted $74mn.
61​ UKRAINE Country Report​ July 2020 ​ ​www.intellinews.com