Liquidity reallocation

Обзор облигаций 19.05.2015 Broader banking sector liquidity slid a mere UAH0.32bn to UAH31.87bn yesterday following last Friday's minor reallocation of funds. Banks' correspondent accounts with the NBU declined UAH1.04bn to UAH25.25bn while total CDs outstanding rose a similar UAH1.13bn to this year's record high of UAH32.19bn. Total local currency debt repayments scheduled for the next 30 days declined UAH0.41bn to UAH4.42bn. KyivPrime interest rates slightly diverged: the KyivPrime ON interest rate remained steady at 21.00% since last Thursday while the KyivPrime 1M interest rate slid 20bp to 27.80%. Investment implications: With little support from the NBU, and as last Friday's debt interest repayment was on privately issued bonds, these funds could be received most likely by the DGF. Because these funds were not received by banks, yesterday's liquidity decline is unimportant. The NBU continued to increase CDs outstanding to UAH32.19bn, only UAH1.5bn from the record high seen at the end of last September. Month-end tax payments could begin this week, possibly requiring injections from the NBU and CD redemptions. As last Friday's CD purchases have redemptions scheduled this Friday (UAH1.70bn) and next Friday (UAH1.11bn), funding needs should be minimal over the next few days. Nearly half of the CDs are to be repaid during the tax payments period.