Bonds: Liquidity declines

Обзор облигаций 25.09.2014 After rising significantly on Tuesday, banking sector liquidity fell a whopping UAH9.85bn to UAH55.81bn yesterday as banks' correspondent accounts with the NBU declined UAH10.26bn to UAH31.17bn. Total local currency debt repayments scheduled for the next 30 days remained steady at UAH7.56bn and total CDs outstanding rose UAH0.42bn to UAH17.08bn. KyivPrime interest rates slightly declined: the KyivPrime ON interest rate fell 38bp to 8.00% while the KyivPrime 1M interest rate declined 30bp to 15.33%. Investment implications: On Monday and Tuesday, the NBU purchased a significant volume of government bonds, most likely to provide FX funds for Naftogaz, causing high volatility. Although these deals were mostly technical, total CDs outstanding rose to this year's record high yesterday, showing that banks have sufficient liquidity to avert bond or loan issuances.