January 12, 2016 | Cbonds
|Banking sector liquidity slightly declined yesterday, down UAH1.44bn to UAH116.41bn, after last week's significant volatility. Banks' correspondent accounts with the NBU rose UAH0.65bn to UAH28.92bn while total CDs outstanding fell UAH2.09bn to UAH87.49bn.|
Investment implications: Liquidity saw high volatility at the beginning of the year, as only two CD tenders last week caused liquidity to decline below UAH100.0bn, although it rocovered immediately. This high level of liquidity was caused by the MoF's significantly accelerated budget expenditures at the end of 2015, wherein the treasury account balance fell to UAH9.02bn from nearly UAH48bn a month before. During January, we could see liquidity decline, mostly in CDs outstanding, and a significant recovery at the treasury accounts, as the MoF will resumes absorbing funds for budget expenditures. We expect liquidity to decline to UAH100.0bn or below.