The Ministry of Finance resumed the placement of government bonds

The Ministry of Finance yesterday placed domestic government loan bonds for more than UAH 1 billion. Most of them were attracted for five years, but banks also created market demand for short-term securities. Experts predict an increase in demand for short-term securities, but clarify: due to the growing interest in risk among external investors, Ukraine has a good opportunity to attract cheaper resources.

Yesterday, the first auction of this year for the placement of domestic government bonds (OVGZ) took place. It was quite successful - the Ministry of Finance managed to attract UAH 1.150 billion. However, at the end of last year, investor interest in government securities was many times greater: for example, at the auction on December 30 government bonds worth UAH 4.2 billion were placed. Banks have traditionally shown the greatest interest in long-term securities - five-year government bonds were placed for UAH 1.12 billion at a rate of 14.25%. Banks were also interested in short government bonds for a period of nine months - 14 applications were submitted. However, as a result, only one of them was satisfied for UAH 23.4 million, and the rate of return was 8.75%.

Experts note that market demand for government securities has finally begun to form. “The largest volume of long-term securities was bought by friendly banks at friendly rates, so this is not interesting. But it is noteworthy that market demand for short-term bonds has finally begun to form. This is due to the fact that rates on the interbank market have fallen, since liquidity there is high. Therefore, the yield on government bonds has become acceptable for banks - they are now looking for at least some options,” says Sergei Fursa, a specialist in the sales department of debt securities at Dragon Capital Investment Company.

A high level of liquidity on the interbank market has been maintained since the end of December. Yesterday, the volume of funds in correspondent accounts of banks amounted to UAH 31.8 billion. The overnight rate on Monday was at 5.8%, while on December 31, 2013 it was 22.7%. “If rates on the interbank market remain at current levels, the price of short-term government securities will not increase in the near future, and the level of 8.75% will be a benchmark for the market. But the demand for such securities will increase,” predicts Sergei Fursa.

Nevertheless, analysts believe that the state is still more interested in long-term money. “The Ministry of Finance is more interested in attracting long-term resources, so it minimizes short ones. In addition, interest on short-term securities makes them less attractive for buyers,” notes Oleg Ustenko, executive director of the Blazer International Fund.

The Ministry of Finance also has the opportunity for placements on foreign markets. “14% for long-term resources is still expensive. Over the past two weeks, the cost of borrowing on external capital markets has fallen even for completely unsuccessful European countries,” says Oleg Ustenko. “For example, Ireland raised funds at 4%, Portugal - 5 " .

Elena Gubar

Initiative for a billion