Page 54 - UKRRptMay21

The interest rate for 1Y bonds increased to 11.15% from 10.75% last week. The sale of these bonds to 19 bidders brought the lion’s share of auction receipts, or UAH4.4bn. The interest rate for 6Y bonds, which were sold to 11 bidders for UAH152mn jumped to 12.75% from 12.5% a month ago.
MinFin satisfied seven out of eight bids for 3M bonds for UAH33mn at 8.50% (vs. 7.77% for these bonds two weeks ago). The rest of auction receipts – UAH3mn came from the sale of 20M bonds to two bidders at 11.30% (vs. 11.10% for these bonds last week).
Even with a hiking of interest rates, the receipts from the latest auctions were quite modest, and they are definitely not enough to compensate for the failure of the two previous auctions. The increased involvement of state-owned banks at the latest auction was very likely.
The auction next week is likely to be higher as the sale of 1Y $denominated and 1Y €denominated bonds should attract more buyers. The sale of UAH denominated bonds is still likely to face difficulty as the risk assessments of auctions participants will not improve.
Before the news broke of the proposed Biden-Putin summit in late afternoon London time on April 14, the yield on Ukraine’s dollar bond due in 2032 reached 7.67%, the highest since November and taking the 3-day increase to 34 bps. Similarly, the yield on 2026-dollar debt climbed 12 bps to 6.78%. Ukraine’s GDP warrants drop 0.3c to 99.9c on the dollar, trading below par for the first time since November,
J.P. Morgan has placed Ukraine and Egypt on the Index Watch Positive list for possible inclusion in the J.P. Morgan Government Bond Index - Emerging Markets (GBI-EM) index following sustained improvement in liquidity and foreign investor access to domestic government bond markets.
54 UKRAINE Country Report May 2021 www.intellinews.com