Ukraine’s bond market: Investors focus on longer maturities.

Last week, investors’ interest in UAH bonds with longer maturities sharply increased as they tried to lock in current YTMs for longer. Taking advantage of the high demand, the Ministry of Finance continued to lower rates of return on UAH instruments, reported the ICU.

The Ministry of Finance (MoF) offered the usual maturities of UAH bonds (one-, two- and three-year securities) and a 12-month EUR-denominated paper at 3.25% in the primary bond market.

Demand for one-year bills was below the supply cap, while demand for three-year bills was four times larger than the cap. Such oversubscription allowed the MoF to lower rates on three-year notes by 30bp to 17.2%.

Since the beginning of the spring cycle of monetary policy easing, the Ministry has reduced rates on one-year bills by 165bp, on two-year paper by 140bp, and three-year notes by 130bp.