Less money raised from new Military Bonds
Yesterday, the Ukrainian Ministry of Finance replaced both issues of UAH-denominated bills that were offered in March, the funds from which were used to finance the armed forces and other critical expenditures, so-called military bonds. However, this replacement led to a reduction in demand on the primary market.
Instead of one-month and 11-month bills, two new issues of UAH-denominated paper with a maturity of seven and 15 months were offered, with the same terms as before: 10% interest rate for the shorter maturities and 11% for the longer maturities.
Banks have already bought a large amount of military bonds and can only trade these instruments. Consequently, they do not have much in the way of free funds. The next redemption of UAH-denominated bond will take place in late April. On the other hand, small investors cannot participate in the primary auction, so demand from them immediately declined.
Nonetheless, demand yesterday amounted to UAH 3.3bn (US$ 113m), which is a very positive result even in such conditions. Next week the interest may rise even more.
RESEARCH TEAM Taras Kotovych
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