NBU debut auction results

Обзор облигаций 09.12.2015 At yesterday's debut auction, the NBU sold UAH52.3m of VAT bonds maturing in 2019 (ISIN UA4000185557) at a weighted average yield of 19.12%. All bids with yields above the cut-off level of 19.25% were rejected, and these levels were below recent market quotes. The NBU rejected UAH155.1m of bids which had yields up to 23.8%. The lowest yield was 19%. Investment implications: The NBU slightly broke the limits of the yield curve of five bonds which it publishes daily, as yesterday's yield was close to bonds with shorter durations. While the market signalled that the current cost of funds is higher than the NBU anticipated, yesterday's auction indicates that there is large demand for local currency government bonds and that the MoF should review its policy for domestic borrowing.