Liquidity continues to decline

Обзор облигаций 19.02.2015 Broader banking sector liquidity slightly declined yesterday, down UAH0.73bn to UAH54.03bn, as banks' correspondent accounts with the NBU fell UAH0.53bn to UAH30.26bn and total CDs outstanding decreased UAH0.20bn to UAH16.70bn. Total local currency debt repayments scheduled for the next 30 days remained steady at UAH7.07bn. KyivPrime interest rates diverged: the KyivPrime ON interest rate remained steady at 17.00% for the third consecutive day while the KyivPrime 1M interest rate increased once more, up 25bp to 22.75%. Investment implications: The NBU refinanced its ON loans by issuing UAH2.11bn in new loans to eight banks at a 23% interest rate. The FX market and/or tax payments could cause outflows. As yesterday's debt repayments should have an impact on today's indicators, liquidity could decline if the NBU issued no additional loans yesterday, particularly as banks had to repay UAH2.11bn of ON loans and UAH0.18bn of 1-year loans issued on February 24, 2014.