Ukrainian Finance Ministry lowers 18-month USD bond cut-off rate to 4.04%, 4-yr benchmark bond to 14.9%

MOSCOW. Oct 15 (Interfax) - The Ukrainian Finance Ministry's cutoff rate at its Tuesday auction for 18-month dollar-denominated domestic government bonds fell to 4.04% from 4.10% a week ago, thanks to increased demand for $55 million at face value and reduced offer of $50 million.

The weighted average rate fell to 4.02% from 4.09% per annum, Ukrainian media reported, quoting the Finance Ministry's website.

Demand was $301.1 million and offer totaled $150 million.

Maximum bids fell from 4.15% to 4.10%, and minimum bids from 3.95% to 3.90% per annum, with 56 of the 65 bids satisfied.

According to the auction calendar published at the end of September, this auction will be followed by a pause of one month in the placement of forex-denominated bonds. After this, buyers will again be able to bid every week for 18-month dollar bonds from November 18 to December 9, the last of the year.

The Finance Ministry does not yet have any auctions for euro-denominated government bonds scheduled in the fourth quarter.

As for hryvnia bonds, a new 46-month bond issue was offered at Tuesday's auctions. These will likely become benchmark bonds, which banks will be able to use to form up to half of their required reserves.

The Finance Ministry of Finance last offered benchmark bonds in early September, so this time, demand was way higher than supply at UAH 22.5 billion versus UAH 5 billion. This meant the cutoff rate could be lowered from 15% to 14.9% per annum, and the weighted average rate from 14.94% to 14.89%, although the bidding range was higher at 14.8%-15.2% against 14.65%-15.0% in early September. The ministry satisfied 11 of 26 bids.

As for other hryvnia bonds, their cutoff rate has remained unchanged since April of this year: 13-month - 16.35%, 20-month - 17.1% and 38-month bonds - 18.1%.

Total offer was UAH 5 billion at all three hryvnia auctions, and demand was UAH 2.42 billion for the short-term bonds, UAH 2.93 billion for the long-term bonds, and UAH 2.26 billion for the 20-month bonds.

The Finance Ministry satisfied all 74 bids and raised UAH 8.09 billion, compared to UAH 14.94 billion the previous week.