OREANDA-NEWS. January 11, 2007. Sergiy Yahnych, Head of Fixed Income Research Analysis Unit of Corporate Finance Division of JSCIB “UkrSibbank”:

There is no point in waiting for decrease of bonds rates at the primary market, it’s more likely to proceed in reverse. For one thing, in the first half of the year the majority of Ukrainian banks will still keep recovering from the effects of global financial crisis and of diminishing availability of funding abroad.

As Ukrainian commercial banks are the main players which dictate the demand at the domestic bond market, it will defiantly affect the rates. Besides, alongside with record high for the last seven years inflation growth (14,2% for 11 months of 2007), the NBU was forced to increase the cost of money at the domestic market by tightening monetary policy (increase of provisioning ratios, credit operations rates, etc.). It is worth pointing out, however, that the issuers entering the market didn’t get used to new levels, as the liquidity has changed rapidly and unevenly. The future situation will depend on money stock growth rates. If social benefits or the inflow of debt and investment capital go up, the liquidity will increase and the rates will be brought down for a while.