KYIV, Sept 21 – Ukraine failed to raise new cash at its latest treasury bill auction as commercial banks, holding bills the government has not repaid on time, declined to bid, the Finance Ministry announced on Thursday.
The ministry said it had not sold three-month or six-month OVDP discount treasury bills at auctions on Tuesday, and it failed at other auctions earlier in the month.
“We failed to sell bills due to an absence of bids by commercial banks,” a ministry representative said.
The ministry last auctioned OVDP treasury bills on August 22, when three-month paper yielded 22 percent and six-month bills yielded an average 23.48 percent.
Commercial banks say they are cautious since the Finance Ministry failed on September 13 to redeem maturing 450-day t-bills worth Hr 68.15 million ($12.53 million).
On Tuesday, a senior central bank official said the finance ministry had repaid about 40 percent of overdue payments on the treasury bills or over Hr 28 million ($5.15 million).
Presumably new funds raised on Thursday could have been used to repay remaining bills.
Traders have said the technical default could sound the death knell for the country’s short-term debt market, which had recently started to recover.
This is the first time since the 1998 economic crisis, which followed the Russian economic disaster of the same year, that the government has failed to redeem its debt to banks.
