The Ministry of Finance expects a rise in demand for OVHZ
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In 2023, the Ministry of Finance will continue to offer the market domestic government loan bonds with a maturity after 2023 to minimize the debt burden for the current year and optimize service costs. This was stated by the government commissioner for the management of the state debt, Yury Butsa, writes Interfax-Ukraine.
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“We see that inflationary expectations by the end of 2024 are already lower than the yields of the corresponding instruments, which leads to an increase in demand for them and a corresponding decrease in yields on the secondary market,” he noted.
Butsa reminded that over the past six months, the Ministry of Finance has significantly extended the instruments placed at primary auctions and now offers OVHZ with repayment terms from 6 months to 2.3 years.
“In order to reduce the risk of refinancing, the Ministry of Finance offered the market a new benchmark instrument maturing in 2025, gradually lengthening the yield curve formed at the primary auctions. The NBU proposed to give banks the opportunity to count all new benchmark OVHZ against the coverage of required reserves, which will contribute to their liquidity on the secondary market,” the government official added.
Read: The NBU again raised the requirements for mandatory reserves of banks
He also noted the revival of the secondary market and the narrowing of spreads between the purchase and sale prices, at the same time he noted that the quality of pricing on the secondary market does not allow taking into account the information received during operations on the primary market.
“The Ministry of Finance expects the continuation of the trend of increasing the liquidity of the secondary market and the corresponding continuation of the narrowing of spreads between the secondary and primary markets,” Butsa noted.
Read: The National Bank named the first privileged OVHZs that will be included in the ego benchmark Reminder
Since January 11, the National Bank of Ukraine has increased mandatory reserve requirements for current accounts (demand deposits) in hryvnias and foreign currencies by 5 percentage points. — in accordance with 5% and 15%, allowed to cover up to 50% of the total volume of mandatory reserves at the expense of the benchmark OVHZ.
As a result, mandatory reserves increased by UAH 74.3 billion to UAH 144.1 billion, which means the purchase limit of the benchmark OVHZ under reserves of UAH 72 billion for the period until February 10.
Source: Ministry of Finance
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