Liquidity declines despite inflows

Обзор облигаций 30.04.2015 The broader liquidity indicator declined only UAH1.19bn to UAH54.12bn yesterday, as significant inflows from the NBU limited the downside. Banks' correspondent accounts with the NBU fell UAH0.58bn to UAH21.93bn and total CDs outstanding declined UAH0.61bn to UAH26.52bn. Total local currency debt repayments scheduled for the next 30 days remained steady at UAH5.67bn. KyivPrime interest rates rose: the KyivPrime ON interest rate rose 37bp to 21.92% while the KyivPrime 1M interest rate was up 40bp to 28.00%. Investment implications: The NBU significantly supported banking sector liquidity by purchasing UAH2.30bn of government bonds in its portfolio on Tuesday and issuing UAH0.10bn of ON loans the same day, after two weeks of no activity. While a portion of liquidity could be provided to Naftogaz for the US$40m FX purchase to fulfil the prepayment to Gazprom for natural gas, the remaining funds could be received by banks. As banks repaid UAH0.27bn of loans to the NBU on Tuesday, the balance could be used for month-end tax payments and FX purchasing.