Today the National Bank of Ukraine for the first time in 18 months held a placement of 3-month certificates of deposit (CDs) for the amount of UAH 500 million. Altogether, 32 bids for almost UAH 2.3 billion has been received, the offered rates ranged from 12.5% to 18% per annum.

The bids were met using the principle of a single marginal rate that equaled 12.89% as a result of this auction. A total of four bids for the total amount of UAH 500 million have been satisfied.

"Three-month certificates of deposit will help to form a yield curve and set prices for other instruments. The demand observed during our first placement shows that market players needed such instrument. In future, we hope to see the secondary market for three-month CDs to develop actively", - commented the auction results Serhii Ponomarenko, Director of the NBU Open Market Operations Department.

The next placement of three-month CDs is scheduled for 20 September. The CDs placed today as well as the ones to be placed within the next three weeks will be repaid on 13 December 2017.

The NBU resumed placement of three month CDs because there was no yield curve for hryvnia-denominated instruments with the maturity from one to three months. It was due to the fact that the Ministry of Finance does not place three-month domestic government bonds and the maximum maturity at the interbank credit market is two weeks. This situation made it more difficult to price other instruments, in particular FX forwards. Placement of CDs with a three-month maturity should address this shortcoming, help build a yield curve and increase the effectiveness of the transmission mechanism of the NBU’s monetary policy.