Page 55 - UKRRptOct22

8.5 Fixed income
The Ministry of Finance has recorded the lowest demand for military bonds since the beginning of the war. On September 6, the Ministry of Finance attracted only UAH 47.35M to the state budget at the military bond auction of the domestic state loan (OVDP). This is the lowest value since the beginning of the war. According to data from the Ministry of Finance, rates on securities remained unchanged. In particular, it was possible to attract UAH 27.52M from the sale of six-month bonds at 12% per annum and UAH 19.82M from the placement of annual government bonds at 14% per annum.
The National Bank of Ukraine will sell government bonds at a 25% rate.
The National Bank is considering the sale of government bonds to increase the attractiveness of hryvnia bonds and deposits, announced the regulator. If the discount rate does not change during the rest of the year, the coupon payment for such bonds will be 25% per annum. For comparison, market government bonds are sold at auctions with rates of 12-16% per annum. Currently, the NBU owns bonds worth UAH 619.57B, which is 48% of all government bonds in circulation. Of this amount, the National Bank bought UAH 315B of government bonds after the beginning of the invasion. The considered transactions would provide an alternative opportunity for market participants (mainly the population and businesses) to buy risk-free hryvnia financial instruments with an attractive yield and flexible maturity to protect hryvnia savings from inflation.
Ukrainian bonds have lost up to 20% of their nominal value.Last week, Ukrainian Eurobonds continued to fall amid news of the pseudo-referendums and illegal annexation of Ukrainian territories. According to Bloomberg data, dollar-denominated Eurobonds maturing in 2025 fell by 4.3% to 23.9% of face value. Bonds with repayment in 2026-2030 fell to 20.9-22% of their face value. The price of the longest dollar bonds maturing in 2031-2035 decreased the most, by an average of 7.6% to 19.1-18.5% of face value. The dynamics for the value of euro-denominated securities are similar, with an average decrease of 4.8%. At the end of last week, both the 2028 and 2032 bonds were quoted at 19.4% of face value. GDP warrants fell a little more, by 6.6% to 29.2% of the nominal value. Overall, in two weeks, quotations of Eurobonds of Ukraine decreased by an average of 13%, and GDP warrants by 12.8%.
8.5.1 Fixed income - bond news
Naftogaz succeeds in postponing most Eurobond payments until 2026. According to the Ukrainian state energy company, 77% of investors agreed to delay €600mn of loans for two years after the original 2024 deadline, The remaining €90mn will be repaid by 2024.
Ukraine has launched military bond sales through the Diia app. Starting October 3, Ukrainian citizens can purchase military bonds through the Diya application. As noted by the Ministry of Digital Transformation, the cost of one military bond starts at UAH 900 ($25), and there are no purchase limits. The bonds differ in terms - up to 1.5 years, with income%ages ranging between 11% to 16% per annum, and bear names in recognition of temporarily occupied cities and territories - Kherson, Melitopol, Mariupol, Crimea, etc. To purchase military bonds through the Diia mobile application, you must update it
55 UKRAINE Country Report October 2022 www.intellinews.com