On May 31, the Ministry of Finance attracted only Hr 3.1bn ($105m) to the state budget, a fourfold reduction compared with the previous week. But this is not surprising because there will be no redemptions, so investors did not have funds to reinvest.
Out of the five offered issues, just three bills were already sold at primary auctions earlier this year: two-month and 1.5-year local-currency bills, and 11-month USD-denominated paper. This did not contribute to the extra activity of investors: two-month securities were purchased for Hr 351m ($12m), 1.5-year bills for only Hr 60m ($2m), and USD-denominated bills for only $15.8m.
But in contrast to previous auctions when new instruments were not very interesting to investors, the new issue of six-month bills maturing at the beginning of next year received the greatest demand on June 1.
Demand totaled Hr 1.8bn ($61m), and the budget received almost Hr 1.7bn ($57m). In addition, June 1 saw the offer of another issue of two-month bills, which were not classified as military and, under current regulations, cannot be sold on the secondary market.
They were placed on the same terms as military bonds, at a rate of 9.5%, and came to Hr 550m ($18m) at face value. Such a decision could be a step by the MoF toward the market to meet the needs of investors who cannot invest in military bonds, but want to buy new Ukrainian securities.
So, although borrowing has declined, the general trend in the structure of instruments and the distribution of demand is improving expectations that the addition of non-military bonds may expand the investor base.
In particular, foreigners who have not bought military bonds in the past few weeks may be interested in such instruments.
RESEARCH TEAM Taras Kotovych Complete report at https://icu.ua/uk
