Liquidity continues to decline

Обзор облигаций 28.05.2015 Broader banking sector liquidity declined UAH1.49bn to UAH58.59bn yesterday as banks' correspondent accounts with the NBU fell UAH0.93bn to UAH21.03bn and total CDs outstanding was down UAH0.56bn to UAH32.44bn. Total local currency debt repayments scheduled for the next 30 days remained steady at UAH5.12bn. KyivPrime interest rates slightly diverged: the KyivPrime ON interest rate was steady at 21.00% while the KyivPrime 1M interest rate rose 13bp to 27.80%. Investment implications: With low ON loans and a specific bond issue that was finally purchased by the NBU, liquidity declined under the pressure of month-end tax payments. The NBU purchased about UAH2.0bn of bonds on Tuesday which were also issued the same day, most likely to provide funds for Naftogaz or the Deposits Guarantee Fund. As the issue appears not to have been oriented to banks, it was purchased immediately by the NBU. With yesterday's debt repayments, banks will see inflows equal to NBU-issued loans at yesterday's tender on refinancing. Today's indicators could recover, but they still remain under the pressure of month-end tax payments.