OREANDA-NEWS. On September 17, 2007, Ukraine's Ministry of Finance placed its three-year domestic public bonds, though it failed in the placement of four-, seven- and ten-year bonds, the press-service of Millennium Capital, a financial services provider, reported.

The total amount of the placement was USD1.005 mln at the yield rate of 6.6%. The yield rates of the four-, seven- and ten-year bonds were 6.4%, 5.4% and 5.1%, respectively. This is the first successful allocation after September 6, when three-year bonds were placed in the amount of USD26.1 mln at the yearly rate of 6.6%. There also have been the following bond placements:  September 3, three-year bonds totalling USD14 mln and four-year bonds for USD2.2 mln (yield of 6.6% and 6.4% respectively); September 10 and September13 placements failed. The yield rates in these days were the same as on September 17 . The total amount of funds involved through domestic government bonds so far amounts to nearly USD43 mln.

Low demand for government bonds is explained by a low yield offered by these bonds, which is below the expected inflation rates for 2007 and 2008. The amount of funds involved so far is negligible. If this low demand continues, the government will have either to find an alternative source to finance the budget deficit, for example, via privatization, or increase the offered yield rates of its bonds.