Successful budget financing

Обзор облигаций 10.12.2014 The MoF raised more than UAH1.50bn of financing at yesterday's scheduled primary auction. Although the schedule included 2-year and 10-year local currency bonds, the MoF withdrew the 10-year bond offering. Similar to an auction held in November, this auction attracted only one bid at the routine 17.60% rate. As the MoF issued UAH15.0bn of new bonds last Friday, of which one third was purchased by the NBU under the domestic QE program, some funds most likely were provided to create demand at this auction. Proceeds from this auction should cover UAH0.75bn in local currency debt repayments while other funds should cover current budget needs. As UAH3.64bn (US$233.87m) in scheduled USD-denominated bonds redemptions and interest repayments were not refinanced, the MoF has scheduled an FX-denominated bond offering next week. Considering the challenges to the budget's performance, the MoF could try to provide FX for the state budget to cover FX outflows of FX. However, as FX-denominated debt significantly increased the volume of state debt, the FX-denominated bond offerings could be postponed until the end of this year.