Liquidity down slightly

Обзор облигаций 09.02.2016 Banking sector liquidity declined UAH2.30bn to UAH116.59bn yesterday as banks' correspondent accounts with the NBU fell UAH1.80bn to UAH35.43bn while total CDs outstanding decreased UAH0.50bn to UAH81.16bn. A slight increase in FX trading was likely the main reason for the liquidity decline. Investment implications: Despite minor outflows from liquidity, banking sector liquidity remains high. At the same time, the NBU will not absorb funds via 3-month CDs starting this week as it transferred this maturity to the MoF which extended its offering of new 3-month bonds scheduled for today through the following weeks in February. This policy change could increase demand for short-term CDs and possibly have an impact on demand for local currency bonds which, with longer maturities, have higher yields.