The NBU will increase its presence at the market

Обзор облигаций 01.07.2015 In an effort to stimulate the money market, secondary government bond trading, and new bond issues to banks, the Monetary Policy Committee last week recommended that the NBU sell CDs with maturities of up to three months as well as government bonds from its portfolio. If the NBU implements these recommendations, the yield curve could be extended from its current length of 30 days to at least three months, just using CDs. While longer maturities will depend on which bonds the NBU offers, the NBU will have to assess its ability to buy the new bonds back when banks need extra liquidity. This is a very positive attempt to rebuild the yield curve, especially since the MoF has not sold local currency bonds at primary auctions since the end of February 2015 and has only issued bonds under non-market conditions. The NBU should become more active in the secondary bond market, favoring bonds over CDs, to bolster market demand and liquidity in bond trading for banks.