Liquidity declines significantly

Обзор облигаций 23.12.2014 Banks' correspondent accounts with the NBU fell UAH3.47bn to UAH34.33bn yesterday while total CDs outstanding increased UAH0.95bn to UAH11.95bn and total local currency debt repayments scheduled for the next 30 days remained steady at UAH3.05bn. As a result, broader banking sector liquidity fell UAH2.52bn. KyivPrime interest rates slightly diverged: the KyivPrime ON interest rate rose 40bp to 17.00% while the KyivPrime 1M interest rate slid 20bp to 19.00%. Investment implications: Although the NBU provided significant support last Friday, it was insufficient to cover outflows and liquidity fell significantly. While banks purchased UAH0.50bn at the primary auctions, the NBU compensated for these funds by increasing its portfolio once more. The NBU increased the volume of ON loans issued to banks by UAH0.29bn last Friday as it increased total CDs outstanding by UAH0.95bn. The slight increase in injections was reduced by the increase in CDs outstanding. With month-end tax payments scheduled, liquidity could fall more significantly this week. Back to contents