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Government Borrows over UAH 1 trillion through Auctions to Sell Domestic Government Debt Securities since Martial Law Was Imposed

Government Borrows over UAH 1 trillion through Auctions to Sell Domestic Government Debt Securities since Martial Law Was Imposed

According to the NBU Depository, in the first four months of 2024, the government of Ukraine raised an equivalent of over UAH 196 million: UAH 139,062.5 million, USD 763.6 million, and EUR 670.8 million from offering domestic government debt securities through auctions and allocated UAH 70,142.2 million, USD 810.9 million, and EUR 841.2 million for redemption of domestic government debt securities.

In January–May 2024, the Ministry of Finance borrowed in the domestic debt market UAH 59,729.6 million more (in equivalent) than it spent to redeem domestic government debt securities, specifically UAH 15,191.6 million more in May (in equivalent). The rollover of investments in domestic government debt securities (the ratio of the face value of securities sold at auctions to those redeemed in accordance with the terms of their issue) in January-May was 127% in all currencies at the current official exchange rate.

In total, from the onset of russia’s full-scale invasion of Ukraine through 31 May 2024, the government raised more than UAH 1,014 billion, USD 6,380.9 million, and EUR 2,383.9 million through primary auctions and allocated UAH 499,514.1 million, USD 6,946.5 million, and EUR 2,091.8 million to redeem domestic government debt securities.

The domestic debt market was revived thanks to the joint efforts of the government and the National Bank of Ukraine.

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, 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 May 2024, the maximum yield on domestic government debt securities offered at auctions was 17.50% per annum for hryvnia-denominated bonds and 3.25% per annum for U.S. dollar-denominated bonds. U.S. dollar-denominated war bonds were not issued in May.

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 funds 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.

Below are the NBU Depository’s detailed statistics on war bonds offered through auctions, as of 3 June 2024.

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

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

  • UAH 64,027.1 million or 33.1% of the total value of purchased hryvnia-denominated war bonds (UAH 57,249.2 million or 27.9% as of 1 May)
  • USD 1,464.7 million or 63.2% of the total value of U.S. dollar-denominated war bonds (USD 1,415.4 million or 61.0% as of 1 May)
  • EUR 94.9 million or 19.9% of the total value of euro-denominated war bonds (EUR 117.8 million or 18.2% as of 1 May).   

Overall, the portfolio of war bonds owned by individuals and legal persons is equivalent to UAH 127.6 billion, according to 3 June 2024 data, up from UAH 57.9 billion on 1 June 2023, an increase of nearly 2.2 times.

Nonresidents hold UAH 13,431.6 million, USD 24.3 million, and EUR 0.1 million in war bonds, the volumes growing 1.5 times in a year (since 1 June 2023), data available on 3 June 2024 show.

In May 2024, the Ministry of Finance redeemed UAH 21,864.0 million of hryvnia war bonds and USD 285.7 million of euro 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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Outstanding Military Domestic Government Debt Securities as of 01 June 2024
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