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Performance of State Securities Market of Ukraine in January-June 2011

In January-June 2011, the Ministry of Finance of Ukraine placed government domestic bonds (GDB) worth UAH 35,469.97 mln ($ 4,449.77 mln – hereinafter all amounts are in U.S. dollars at the exchange rate of the National Bank of Ukraine*) with a weighted average yield of 9.15% p.a. (in June – UAH 8,998.47 mln ($ 1 128.87 mln), AWY at 9.49% p.a.), including:
• Funds raised by the State Budget of Ukraine in January-June 2011 as the outcomes of GDBs primary placement – UAH 18,115.97 mln. ($2272.68 mln), at AWY 8.81% p.a. (in June – UAH 594.47 mln ($74.58 mln) at 9.38% p.a.);
• GDBs issued to increase the formation of the authorized capital stock of banks in January-June 2011 for a total amount of UAH 8,854.01 mln ($ 1,110.75 million), at AWY 9.50% p.a. (in June – UAH 4904.00 mln ($ 615.21 million), AWY – 9.50% p.a.);
• GDBs issued to increase authorized capital stock of "Naftohaz Ukrainy" in January-June 2011, a total of UAH 8,500.00 mln ($ 1066.34 mln.) at AWY 9.50 % per year (in June – 3 500.00 mln. ($ 439.08 mln.), a weighted average yield – 9.50% APR).

The total amount of GDBs circulating as of 1 July 2011 was UAH 156,529.98 mln ($ 19,636.94 mln). To compare, on 1 July 2010 – UAH 105,134.70 mln ($13,189.32 mln).

Redemption of and income payment for government bonds for January-June 2011 carried out in a timely fashion and to the full extent and equaled UAH22,363.84 mln ($2,805.58 mln), including the principal – UAH 15,026.90 mln ($1,885.15 mln) and income payment – UAH 7,336.93 mln ($920.43 mln).

In the secondary organized market, a transaction volume of government securities in January-June 2011 was UAH 39189.25 mln ($4,916.36 mln). In the same period last year – UAH 24,679.75 mln ($3,096.11 mln). The weighted average yield on transactions ranged 8.46-9.49% in January-June 2011, and in the same period last year – 10.67-15.66%.
 
The volume of GDBs owned by nonresidents in January-June 2011 decreased by UAH 2493.0 mln ($312.75 mln) and on 01.07.2011 amounted to UAH 8,876.6 mln ($1,113.58 million), or 5.67% of total GDBs in circulation. During the same period last year, government bonds owned by nonresidents increased by UAH 2,579.8 mln ($323.64 million) and on 01.07.2010 they amounted to UAH 3,063.0 mln ($384.26 mln).

The trade revival of government bonds on the secondary market is largely due to the increase in the primary market of government bonds, their less venturous nature compared to the bonds of private issuers, an attractive profitability and stabilization of UAH currency exchange rate. Another reason for activation of secondary market for government bonds is that starting from February 19, 2010, only 15 banks have access to participate in auctions for their initial public offering – the primary dealers. Others wishing to invest in government securities are forced to buy them on the secondary market.

* 797.1200 UAH = $100 (as of 01 August 2011)

Source: National Bank of Ukraine

 
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