During the latest auction for the placement of government bonds, investors showed increased interest in securities denominated in foreign currency. These bonds accounted for over half of all funds raised for the budget, according to the auction results.
This is reported by Business • Media
Demand for Currency Bonds and the Ministry of Finance’s Response
Since April, the Ministry of Finance has not issued new bonds in US dollars, so there was significant demand for such instruments at this auction. The total volume of applications for dollar-denominated securities reached 217 million USD. However, seven applications for amounts exceeding 5 million USD each included requests for higher yields. The Ministry of Finance decided not to change the terms and kept the cutoff rate at 4.25%, with the weighted average rate remaining at 4.17%.
“The budget received the majority of hryvnia funds from 14-month military bonds without significant changes in rates.”
Dynamics of Demand for Hryvnia Bonds
Among hryvnia securities, the shortest military bonds were in the highest demand. The Ministry of Finance is completing the placement of this issue and plans to issue new securities with a longer maturity next week. It is likely that the rates for them will remain unchanged. Regarding the bond market with longer terms, demand was moderate: applications for 20-month papers totaled 659 million hryvnias, while for three-year bonds, it was nearly 1 billion hryvnias.
Currently, investors are more focused on currency securities due to their limited supply. The Ministry of Finance is gradually aiming to reduce the volume of such bonds in the market, which also affects the distribution of the investment portfolio of auction participants.