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Ukraine’s Government Borrowed Equivalent of UAH 566 Billion through Auctions to Sell Domestic Government Debt Securities in 2023, and almost UAH 818 Billion since Martial Law Was Imposed

Ukraine’s Government Borrowed Equivalent of UAH 566 Billion through Auctions to Sell Domestic Government Debt Securities in 2023, and almost UAH 818 Billion since Martial Law Was Imposed

According to the NBU Depository, the government of Ukraine in 2023 raised UAH 401,785.1 million, USD 3,688.3 million, and EUR 735.8 million by offering domestic government debt securities at auctions, and allocated UAH 216,034.2 million, USD 3,342.3 million, and EUR 588.0 million towards redemption of domestic government debt securities.

During 2023, the Ministry of Finance borrowed in the domestic debt market more than it spent to redeem domestic government debt securities. Borrowing surpassed redemption by the equivalent of UAH 204,112.8 million. Specifically, UAH 39,131.9 of this difference occurred in December 2023. The rollover of investments in domestic government debt securities in 2023 is 150% at par in all currencies at the current official exchange rate.

In total, from the onset of russia’s full-scale invasion of Ukraine through 31 December 2023, the government raised UAH 554,175.7 million, USD 5,617.3 million, and EUR 1,713.1 million through primary auctions and allocated UAH 429,371.9 million, USD 6,135.7 million, and EUR 1,250.6 million to redeem domestic government debt securities.

As a result of joint efforts, the government and the National Bank of Ukraine succeeded in reviving the domestic debt market in 2023.

In particular, the NBU allowed the banks to use benchmark domestic government debt securities from the NBU’s list so that the banks can meet up to 50% of their total required reserve ratios, 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, and introduced an additional 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. The maximum yield on the war bonds issued in December 2023 was 18.60% per annum for hryvnia-denominated bonds, 4.66% per annum for U.S. dollar-denominated bonds, and 3.20% per annum for euro-denominated ones.

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

"The common understanding of challenges, cooperation, and a new level of dialogue between the fiscal and monetary authorities helped restore the domestic debt market’s functionality and prompted it to begin to generate net financing in 2023. This and tremendous assistance from international partners enabled us to endure a very difficult year without resorting to monetary financing. I believe that we will meet the challenges of 2024 in the same coordinated manner. Macrofinancial stability is not manna from heaven: it is our joint achievement and a valuable resource that must be preserved," said NBU Governor Andriy Pyshnyy.

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

Below are the NBU Depository’s detailed statistics on war bonds offered through auctions, as of 1 January 2024.

As before, primary dealers – the banks – hold the largest portfolio of war bonds.

Ukrainians and domestic businesses hold the second-largest portfolio of war bonds. According to 1 January 2024 data, this portfolio comprises:

  • UAH 42,588.8 million or 28.4% of the total value of purchased hryvnia-denominated war bonds (up from UAH 33,692.8 million or 26.9% on 1 December 2023)
  • USD 1,011.9 million or 55.3% of the total value of dollar-denominated war bonds (down from USD 1,022.0 million or 60.3% as of 1 December 2023)
  • EUR 102.8 million or 17.4% of the total value of euro-denominated war bonds (up from EUR 101.0 million or 17.1% on 1 December 2023). 

According to 1 January 2024 data, the overall portfolio of war bonds owned by individuals and legal entities is equivalent to UAH 85.4 billion, almost 2.5 times UAH 34.5 billion, the level of 1 January 2023.

Nonresidents hold UAH 14,779.3 million, USD 24.2 million, and EUR 0.1 million in war bonds, more than 5.2 times the level at the beginning of 2023, data available on 1 January 2024 show.

In December 2023, the Ministry of Finance redeemed EUR 167.0 million of euro-denominated 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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