Liquidity recovers slightly

Обзор облигаций 03.09.2015 Banking sector liquidity recovered a slight UAH1.73bn to UAH70.33bn yesterday after declining significantly at the end of last month. There was significant reallocation of funds to CDs as banks' correspondent accounts with the NBU fell UAH6.39bn to UAH24.43bn on Tuesday as the NBU sold a whopping UAH16.81bn in CDs that day, increasing total CDs outstanding UAH8.12bn to UAH45.90bn. Investment implications: The last time that the NBU sold more CDs than it did yesterday was in March when it sold UAH19.91bn. The difference is that while the NBU sold mostly ON CDs last March, on Tuesday it sold UAH7.20bn in 2-week CD, a positive sign for the market. Currently, total CDs outstanding stand above UAH40.0bn with total liquidity above UAH70.0bn, recovering after month-end tax payments. Although we do not expect to see liquidity decline this week, we could see it fall beginning next week as it the routine for this period of the month, likely due to payments abroad for natural gas and other payments.