Mysterious non-residents: the hryvnia weakens signaling eased demand for local state bonds

UKRAINE - In Brief 23 Dec 2020 by Dmytro Boyarchuk
On Dec 22nd MinFin managed to raise UAH 18.3 billion and $138.5 million locally. That’s an apparent success even though the issuance less than a week ago on Dec 15th was twice as large. The lion's share of the issue, UAH 13.8 billion as well as $138.5 million, has less than a one-year maturity. Securities for UAH 4.6 billion had mid- and long-term maturities from 18 months up to 4 years. Yields on securities picked up slightly. For instance, yields on short term UAH-denominated bonds inched up to 10.85% (weighted average) from 10.74% on Dec 15. But the main question for the yesterday's issue is – what happened to non-residents, who seemingly re-opened Ukraine last week? We did not see appreciation pressure on the hryvnia. Even vice versa – the national currency returned to the levels near UAH 28.3/USD that we witnessed before the story about returning non-residents hit the headlines. We will learn who purchased the new issue of local bonds over the coming days. But FX market gives a hint that non-residents might have evaporated as sharply as they showed up last week.

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