Page 48 - UKRRptFeb23

S&P last upgraded Ukraine’s rating from Caa2 (positive) in August 2017. The rating nadir was Ca (negative) awarded in March 2015 following the Maidan events. Its zenith was B1 (positive) awarded in August 2008 at the apex of the region-wide boom.
8.5 Fixed income
In 2022 the budget received UAH 164B and more than 3 billion in foreign currency from the sale of OVDP bonds. According to the National Bank of Ukraine, the Ministry of Finance placed UAH 164.385B worth of hryvnia government bonds last year, which is 42.9% less than in the same period of 2021. Also, the government placed dollar and euro securities for $2.089B and €984M, which is 32.5% less and 25.8% more than in 2021, respectively. The weighted average yield of hryvnia securities was 12.7% per annum, dollars securities were 4% per annum, and euros at 2.7% per annum.
The NBU wants to stop the "printing" of the hryvnia and encourages banks to invest in government bonds. The National Bank of Ukraine has allowed banks to cover up to 50% of their required reserves through domestic state loan bonds (OVDP). The NBU believes that this step will contribute to more active bank participation in the primary OVDP market and, accordingly, to avoid emission financing of the budget deficit in 2023. As well this maneuver will help the budget through the partial absorption of the banking system’s free liquidity. Thus, when forming reserves during the new retention period, which begins on January 11, 2023, banks can include benchmark OVDP bonds in their coverage of mandatory reserves. The Ministry of Finance first placed the relevant securities at the primary auction on January 3, 2023.
48 UKRAINE Country Report February 2023 www.intellinews.com