Primary auction announcement

Обзор облигаций 08.02.2016 The MoF updated its primary auction schedule, added 3-month bond offerings in February, and will offer today five local currency bonds with maturities from 91 days to 1.5-years. There will be primary placements of 3-month, 6-month and 12-month bonds, while 9-month and 1.5-year bonds will be re-offerings of bonds sold earlier this year. Investment implications: The updated auction schedule was made as the NBU announced that it will not sell 3-month CDs. As the MoF returns to the primary market, it will offer a wider range of bonds while there appears to be no acceptable demand for bonds at the shorter end of the yield curve. The NBU recently sold 3-month CDs at 20.59% while the MoF most likely is looking for interest rates at about 18%, as 9-month and 12-month bonds sold at 18.5%. There could be a large amount of bids for these bonds, but at interest rates closer to the NBU's recent tender results. Most likely, banks will prefer 1-month CDs at rates higher than those offered for 3-month bonds.