Liquidity continues to decline

Обзор облигаций 01.12.2014 The NBU once more decreased its volume of ON loans as it issued just UAH0.04bn of loans to three banks and repaid UAH0.25bn last Thursday, but broader banking sector liquidity declined a significant UA0.83bn to UAH48.22bn. Banks' correspondent accounts with the NBU recovered UAH0.93bn to UAH27.05bn last Friday, receiving significant injections from the NBU as total CDs outstanding declined UAH1.76bn to UAH16.36bn while total debt repayments scheduled for the next 30 days remained steady at UAH4.82bn. KyivPrime interest slightly diverged last Friday: the KyivPrime ON interest rate once more rose 7bp to 11.20% while the KyivPrime 1M interest rate remained steady at 17.00%. Investment implications: Last Thursday, while the NBU made an injection via a CD redemption and caused banks' correspondent accounts to increase, due to month-end tax payments liquidity was absorbed and the broader indicator declined. Today, liquidity indicators should decline once more due to last Friday's tax payments, the last day of tax payments.