Ukraine's finance ministry lowers rates on govt bonds by 20–75 bps to align with NBU's key policy rate
A last-week reduction by the National Bank of Ukraine (NBU) in its key policy (refinancing) rate 17.5% to 17% allowed the Finance Ministry to accelerate the reduction in cut-off rates for six-month and 12-month hryvnia-denominated securities from 17.4% to 16.73% and from 17.74% to 16.99%, respectively, at auctions on Tuesday.
As the ministry said on its website following the actions, it also managed to achieve, for the fifth week in a row, a decrease in rates for other government bonds: for three-month ones from 17% to 16.63% and for three-year ones from 16.75% to 16.55% per annum.
To reduce the rates on securities up to a year inclusive, the ministry "sacrificed" demand at UAH 3.38 billion (hereinafter, demand is at par), limiting the supply of six-month and 12-month securities to UAH 500 million each.
Compared with previous similar auctions, demand for three-month government domestic loan bonds fell from UAH 1.27 billion to UAH 373 million, while demand for three-year ones rose from UAH 1.26 billion to UAH 5.48 billion.
The Finance Ministry rejected two of the 15 applications for the purchase of three-month securities at rates up to 17% per annum and three of the 49 applications for the purchase of three-year securities at rates up to 16.75% per annum.
In total, the ministry raised UAH 6.95 billion at auctions this Tuesday compared to UAH 7.41 billion a week earlier and UAH 6.01 billion two weeks earlier.