Ukrainian Finance Ministry lowers USD bond cut-off rate to 3.13%-3.24%

MOSCOW. April 29 (Interfax) - The Ukrainian Finance Ministry has managed to lower yields on dollar-denominated domestic government bonds substantially for the second time this year: the cutoff rate for the new issue of two-year bonds was 3.24%, down from 3.47% in early March and 3.85% in late February, when 1.5-year USD bonds were offered.

Ukrainian media reported, quoting the MinFin's website, that the weighted average rate dropped even further, to 3.13% per annum, from 3.43% in early March and 3.80% in late February.

The ministry offered $100 million at face value and demand was to $214.2 million at rates ranging from 2.8% to 4.5% per annum. As a result, it satisfied 83 of 115 bids, compared with 47 of 140 bids submitted at the previous auction, when demand exceeded the offer, reduced to $50 million, by almost 8-fold.

There were no changes for hryvnia bonds: total demand at the two primary auctions fell to another low of just UAH 0.14 billion, from UAH 0.27 billion at the previous auction and UAH 0.86 billion at the auction before that, with a standard offer of UAH 2 billion at each auction.

Demand for three-year bonds was UAH 75.0 million. The MinFin rejected one of the 14 bids for UAH 20 million at 16.5% and kept the cutoff rate at 16.15% per annum.

Only UAH 88.2 million of the shortest, 15-month bonds, was purchased, compared to UAH 219.9 million the previous week. The cutoff rate also remained unchanged at 15.15% per annum.

In total, the MinFin raised only UAH 0.15 billion from the sale of local currency government bonds on Tuesday, compared to UAH 0.25 billion last week, UAH 0.82 billion the week before and UAH 1.26 billion the week before that.

The state budget projects domestic borrowing of UAH 419.57 billion and repayment of UAH 524.46 billion this year, while the budget is to be financed by external borrowing of UAH 2.13 trillion, with external liabilities totaling UAH 132.36 billion.

In the first quarter, the MinFin was able to raise UAH 107.73 billion, $251.3 million, and EUR 92.0 million with government bonds. Since the end of January, it has significantly limited the supply and has been able to lower yields on placement, which had been in effect since April 2025: for one-year bonds - from 16.35% to 15.15%, for 2-year bonds - from 17.5% to 15.87%, and for 3-year bonds - from 17.8% to 16.15% per annum. The National Bank lowered the key rate at the end of January only from 15.5% to 15% and left it at this level in March.