Banking sector liquidity: fund reallocations

Обзор облигаций 14.01.2015 The NBU absorbed some funds from the banking system, causing a slight reallocation of funds, as total CDs outstanding rose UAH0.74bn to UAH20.39bn while banks' correspondent accounts with the NBU declined UAH0.67bn to UAH34.88bn. As total local currency debt repayments scheduled for the next 30 days rose UAH0.50bn to UAH6.41bn yesterday, broader banking sector liquidity increased UAH0.56bn to UAH61.79bn yesterday, the record high since the beginning of October 2014. KyivPrime interest rates continued to decline: the KyivPrime ON interest rate fell 120bp to 12.13% and the KyivPrime 1M interest rate declined 83bp to 18.50%. Investment implications: As the NBU only slightly increased ON loans, most of the increase in liquidity came from the reallocation of funds from banks' accounts to CDs.