Liquidity significantly recovers

Обзор облигаций 26.11.2014 After declining over the previous two day, the broader banking sector liquidity rose UAH2.14bn to UAH52.42bn after receiving significant MoF and NBU injections yesterday, including increases in banks' correspondent accounts with the NBU (up UAH1.49bn to UAH28.78bn), in total CDs outstanding (up UAH0.31bn to UAH18.22bn) and in total debt repayments scheduled for the next 30 days (up UAH0.34bn to UAH5.42bn). KyivPrime interest rates remained unchanged since last Wednesday, with the KyivPrime ON rate at 11.00% and the KyivPrime 1M rate at 17.00%. Investment implications: The NBU increased volume its ON loans on Monday by UAH0.61bn to UAH1.42bn while its bond portfolio remained steady since last week. Total bonds outstanding significantly declined on Monday due to the UAH2.24bn decline in the banks' portfolio. As no bonds were scheduled for redemption last Friday that would cause such a decline, and the UAH/USD exchange rate also could not cause these changes, most likely the MoF repurchased bonds to raise additional liquidity. As liquidity rose less than the received inflows, we could see slight decline in liquidity later this week if the NBU provides no new injections.