Liquidity down with reallocations

Обзор облигаций 02.07.2015 Broader banking sector liquidity slid UAH0.32bn to UAH67.91bn yesterday as banks' correspondent accounts with the NBU declined UAH1.66bn to UAH22.37bn and total CDs outstanding increased UAH1.34bn to UAH39.22bn. The NBU increased the volume of ON CDs which should decline today after yesterday's repayments and new issues. Total local currency debt repayments scheduled for the next 30 days remained steady at UAH6.32bn. Investment implications: Although the NBU absorbed extra liquidity it purchased UAH1.5bn of new government bonds, issued the same day, even though yesterday was the last day of month-end tax payments. As these funds could cover some of the outflows, if they were immediately spent yesterday, the decline in liquidity was postponed for only one day. The significantly high level of funds accumulated at treasury accounts also confirmed this, as July began with UAH25.45bn of funds available for the government, UAH2.3bn lower than in June.