Ukrainian Finance Ministry places 18-month U.S.-dollar denominated govt bonds

MOSCOW. July 30 (Interfax) - After a three-month pause, the Ukrainian Finance Ministry has announced an auction for government bonds denominated in U.S. dollars and offered 18-month bonds breaking its previous pattern of offering only 12-month or 13-month debts over the previous two years, Ukrainian media reported with reference to the ministry's statement.

While increasing the term to maturity, the Finance Ministry still managed to keep the yields at the same level as three months ago, that are 4.25% cutoff rate and 4.17% weighted average rate.

At the same time, compared with the previous auction in April, demand dropped by nearly 80% to $216.9 million from $1.03 billion (at par value from this point on) and was below supply of $250 million, while the rate spread increased to 3.8%-5% from 4%-4.49% at the April auction.

As a result, the Finance Ministry turned down seven of 113 bids valued at $5.15 million at par and raised $211.8 million.

As for hryvnia-denominated bonds, after the National Bank of Ukraine decided on July 24 to keep the refinancing rate unchanged at 15.5%, the bond rates at the first auctions following this decision also remained unchanged, i.e. 16.35% for 14-month bonds, 17.1% for 20-month ones, and 17.8% for 38-month ones.

In the absence of supply of benchmark bonds, demand for short bonds was the highest, UAH 4.63 billion, double the amount seen at the previous auction.

At the same time, demand for 20-month bonds dropped to UAH 0.66 billion from UAH 2.32 billion, and that for 38-month bonds dropped to UAH 0.96 billion from UAH 2 billion.

The Finance Ministry granted all the 79 bids at three auctions and raised UAH 6.63 billion, compared with UAH 17.01 billion on the previous Tuesday, when the sale of benchmark bonds raised UAH 10.10 billion.

As reported, the Finance Ministry limited the number of auctions on government FX bonds due to significant foreign financing in H1 2025 but then reconsidered its decision in the second half of July. As seen from an updated schedule of government bond placement published on the ministry's website, in addition to three dollar-denominated auctions set for July 29, August 19, and September 23, which were previously announced for Q3 2025, another three auctions are now planned for August 5 and 26 and September 30.

As for euro-denominated bonds, two auctions are planned for the third quarter, one held on July 8 and the other set for September 9, while the previous version of the schedule announced the only auction set for September 2.

Finance Minister Sergei Marchenko said early in 2025 that the ministry would try to stabilize the volume of borrowings on the domestic market to ensure the repayment of the previously issued debt, as the potential of this market to finance the deficit was virtually exhausted.

However, the government submitted a bill on increasing the 2025 state budget expenditures by UAH 400.5 billion to the Verkhovna Rada in June, under which UAH 250 billion of this amount is be provided through increasing net borrowings on the domestic market. The bill envisages increasing the volume of domestic government bonds to be placed by UAH 184.9 billion to UAH 764.1 billion and at the same time reducing payments on them by UAH 65.1 billion to UAH 496.9 billion.

The year 2024 saw a record high volume of funds raised on the domestic government bonds market, UAH 638.4 billion.