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Ukraine’s Government Raises Almost UAH 1,316 Billion through Auctions to Sell Domestic Government Debt Securities since Martial Law Was Imposed

Ukraine’s Government Raises Almost UAH 1,316 Billion through Auctions to Sell Domestic Government Debt Securities since Martial Law Was Imposed

According to the NBU Depository, in the first ten months of 2024, Ukraine’s government raised the equivalent of nearly UAH 498 billion by selling domestic government debt securities: UAH 363,976.1 million, USD 2,536.3 million, and EUR 754.9 million.  In the same period, the government allocated UAH 188,084.7 million, USD 2,176.6 million, and EUR 918.3 million for redemption of domestic government debt securities.

In January–October 2024, the Ministry of Finance borrowed in the domestic debt market UAH 183,625.1 million more (in equivalent) than it spent to redeem domestic government debt securities, specifically UAH 33,255.3 million more in October (in equivalent). The rollover of investments in domestic government debt securities (the ratio of the face value of securities sold at auctions to the face value of those redeemed in accordance with the terms of their issue) in January–October was 146% in all currencies at the current official exchange rate.

In total, from the onset of full-scale invasion through 31 September 2024, the government raised an equivalent of more than UAH 1,316 billion, in particular: UAH 918,151.8 million, USD 8,153.5 million, and EUR 2,468.0 million. In the same period, UAH 617,456.6 million, USD 8,312.3 million, and EUR 2,168.9 million were allocated for redemption of domestic government debt securities.

The domestic debt market was revived thanks to the joint efforts of the government and the NBU.

In particular, the NBU allowed the banks to use benchmark domestic government debt securities from the NBU’s list to cover part of their required reserves and gradually expanded this list. Furthermore, the NBU enabled the repatriation by nonresidents of interest payments received after 1 April 2023 on domestic government debt securities, provided they comply with a requirement that the investor shall have owned such domestic government debt securities for a certain minimum period that precedes the receipt of said interest.

For its part, the government is offering market-based interest rates on domestic government debt securities. In October 2024, the maximum yield on domestic government debt securities offered at auctions was 16.80% per annum for hryvnia-denominated bonds and 4.66% per annum for U.S. dollar-denominated bonds. Domestic government debt securities denominated in euros were not placed in October.

The domestic debt market’s active operation is important for ensuring macrofinancial resilience. On the one hand, macrofinancial resilience is a safeguard against monetary financing of the budget deficit. On the other hand, it is an important instrument for improving the maturity structure of funding in the banking system and mitigating risks to the FX market and price stability.

Everyone can purchase war bonds now and strengthen the financial resilience of Ukraine.

Find below detailed statistics by the NBU Depository on war bonds offered through auctions, as of 1 November 2024.

Primary dealers – banks – hold the largest portfolio of war bonds.  

Ukrainians and domestic businesses hold the second-largest portfolio of war bonds. As of 1 November 2024, it comprised:

  • UAH 86,555.2 million or 32.4% of the total value of purchased hryvnia-denominated war bonds (UAH 72,821.0 million or 34.6% as of 1 October)
  • USD 1,585.2 million or 52.9% of the total value of U.S. dollar-denominated war bonds (USD 1,504.7 million or 53.1% as of 1 October)
  • EUR 155.0 million or 27.6% of the total value of euro-denominated war bonds (EUR 143.0 million or 25.4% as of 1 October).

Overall, according to 1 November 2024 data, the portfolio of war bonds owned by individuals and legal persons is equivalent to UAH 158.8 billion, nearly 2.9 times the UAH 55.6 billion seen on 1 November 2023.

As of 1 November 2024, nonresidents held UAH 6,567.8 million, USD 29.4 million, and EUR 0.1 million in war bonds.

In October 2024, the Ministry of Finance redeemed USD 400 million in war bonds.

Find out more about the military domestic government debt securities here. The table presents data at amortized face value.

For reference:

On 22 March 2022, the NBU began to publish weekly statistics of the NBU Depository related to war bond transactions. At the beginning of 2023, the NBU switched to the monthly publication of relevant releases as of the first day of the month. Previous data are available by the tag war bonds.

 

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