The Ministry of Finance of Ukraine has completed the country’s first government bond switch auction in partnership with the National Bank of Ukraine.
Switch auctions allow previously issued off-the-run debt instruments to be replaced with recently issued or auctioned, on-the-run replacements. The method is used to improve liquidity management and the debt repayment schedule.
Yuriy Butsa, government commissioner for public debt management, commented: “This new auction mechanism enhances the efficiency of debt operations in the local market, while providing market participants with an additional tool to manage holdings of Ukrainian government bonds. The introduction of switch auctions marks a significant step forward in the development of Ukraine’s government bond market and its alignment with other markets internationally.”
Bloomberg’s bond auction system was used for this activity, allowing it to be completed in one rather than two transactions. The switch auction capability was recently added to the platform.
Katherine Furber, global head of emerging markets trading product at Bloomberg, noted: “Bloomberg’s enhanced switch auction feature provides an optimal, flexible and scalable solution for primary market issuers, who would otherwise have to conduct a manual process, or build and implement their own solution.”
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