Liquidity declines

Обзор облигаций 20.05.2015 Banks' correspondent accounts with the NBU fell UAH3.22bn to UAH22.04bn yesterday while total CDs outstanding rose UAH2.38bn to UAH34.57bn, the record high since 2011. Total local currency debt repayments scheduled for the next 30 days was up UAH1.18bn to UAH5.60bn, causing broader banking sector liquidity to increase UAH0.34bn to UAH62.21bn. KyivPrime interest rates slightly diverged: the KyivPrime ON interest rate rose 10bp to 21.00% while the KyivPrime 1M interest rate remained steady at 27.80%. Investment implications: The NBU continued to absorb liquidity as it issued new CDs maturing later this month and in June. Other outflows from banks' correspondent accounts with the NBU caused liquidity to decline by UAH0.84bn. Only the increase future debt repayments caused broader liquidity to rise slightly. With upcoming quarterly tax payments so far having little impact on liquidity, liquidity could decline today - and recover slightly tomorrow - just prior to month-end tax payments.