Liquidity declines despite inflows

Обзор облигаций 20.02.2015 The NBU yesterday refinanced its ON loans and issued additional loans for 13 days, as it decreased the volume of CDs outstanding while the MoF repaid its local currency denominated debt without refinancing. Despite these inflows, banks' correspondent accounts with the NBU fell UAH0.43bn to UAH29.83bn. Total CDs outstanding declined UAH0.62bn to UAH16.08bn and total local currency debt repayments scheduled for the next 30 days fell UAH1.33bn to UAH5.74bn. Broader banking sector liquidity was down UAH2.38bn to UAH51.65bn. KyivPrime interest rates diverged: the KyivPrime ON interest rate rose 50bp to 17.50% while the KyivPrime 1M interest rate slid 25bp to 22.50%. Investment implications: The NBU issued UAH3.07bn of loans on Wednesday, including UAH2.27bn of ON loans, which covered UAH2.11bn of loans repaid by banks the same day. The NBU also issued UAH0.80bn of 13-day loans to 10 banks. These inflows together with the MoF's debt repayments were insufficient to cover outflows from the banking system.