Attracted by high interest rates,

international investors increased their investment in Ukrainian government bonds by $377 million this month, prompting the central bank to buy $415 million. Despite the purchases, Ukraine’s currency strengthened yesterday to less than 27 to the dollar for the first time in almost a year.

International buyers are back in the market,

ICU has reported. “Last week foreign investors purchased UAH 2bn [$74 million] of new bills in addition to reinvesting funds they received from redemptions,” the investment group wrote of last week’s auction. Taras Kotovych, Senior Financial Analyst for ICU has calculated that international investors recently bought UAH 3-4 billion, an inflow that strengthened the exchange rate. Yesterday, one dollar was fetching UAH 27.08.

Faced with big bond redemptions this week, the Finance Ministry on Tuesday made the biggest bond sales of the year

— $358.6 million and 15.9 million hryvnia, or $580 million. Interest rates were virtually unchanged on the hryvnia bonds, ranging from 8.42% for 3-month bonds and 12.3% on 3-year bonds. For dollar bonds, rates did not change: 3.7% for 1-year bonds, and 3.9% for 2-year bonds. The Ministry posted results of the auctions on its website and on its Facebook page.

Concorde Capital’s Evgeniya Akhtyrko writes:

“The recent placements of new local bonds do practically nothing for financing government spending because of the growing load of local bond redemptions.”

The Finance Ministry raised the equivalent of $370 million at its weekly auction yesterday,

the Ministry reported on its Facebook page. Yields in hryvnia reflect the Central Bank’s increase in the nation’s prime rate 10 days ago to 7.5%. The yields were: 6-month – 9%; 1-year – 11.2%; 1.5 year – 11.3%; 2-year – 11.96%; 3-year – 12.28%. In the foreign currency placements, the Ministry sold $21 million worth of 1-year dollar bonds at 3.7% and €42 million worth of 1-year euro bonds at 2.5%.

Enjoying a peace window, on Monday Ukraine placed 8-year Eurobonds worth $1.25 billion at 6.875% per annum – the lowest yield of the government’s 11 outstanding Eurobonds,

reported Bloomberg. The benchmark was 7-7.25%, but demand was almost three times supply, pushing down the final interest rate, reports Interfax.ru.