Liquidity declines significantly

Обзор облигаций 03.04.2015 Broader banking sector liquidity fell UAH8.16bn to UAH49.21bn yesterday. Although these funds for the most part were absorbed by the NBU, the MoF repaid UAH6.20bn in debt repayments on Wednesday (most likely for bonds in the NBU's portfolio). According to the debt repayment schedule, the MoF redeemed bonds sold this January which probably were immediately purchased by the NBU in the secondary market, as its portfolio rose during these days by a similar volume of bonds outstanding. Excluding funds from debt repayments, banks' correspondent accounts with the NBU fell UAH3.88bn to UAH22.78bn, this year's record low, while the NBU increased total CDs outstanding by UAH1.92bn to UAH16.05bn. The NBU issued UAH1.41bn of new loans on Wednesday while banks repaid UAH0.22bn of ON loans issued on Tuesday. UAH1.20bn of ON loans and UAH0.22bn of 3-month loans for three banks were scheduled to be repaid yesterday. Taking the ON loans into account, outflows from banking sector liquidity amounted to UAH3.15bn on Wednesday, as reflected in yesterday's liquidity indicators. KyivPrime interest rates slightly diverged: the KyivPrime ON interest rate fell 53bp to 23.60% while the KyivPrime 1M interest rate rose 25bp to 28.00%. Investment implications: Outflows on Wednesday could have been caused of (1) banks which were scheduled to repay refinancing loans issued directly without tenders (most likely stabilisation loans) and (2) Naftogas payments to Gazprom or to European partners for imported gas.