On March 1, the Ukrainian Ministry of Finance held the first auction since the Russian Federation started full-scale aggression by invading Ukraine. They offered two bills. One was a regular offering with maturity in two months. The other was a special issue of a 12-month bill dedicated to use by the military The funds will be used to meet the needs of the armed forces and for uninterrupted provision of financial needs of the state during martial law.
The last time Ukraine placed military bonds was 2014-2015, when it needed additional funds for the army due to the annexation of Crimea by the Russian Federation and the actual capture by Russia of part of Luhansk and Donetsk regions and the organization of self-proclaimed republics there. With yesterday’s auction, the issue of such bonds was resumed.
Demand was only Hr 20m for the two-month paper and was satisfied at a rate of 10%, which was set by the Ministry of Finance.
However, banks were more willing to provide funds to support the Armed Forces. Demand exceeded Hr 9bn face value and was at a unanimous rate of 11%. The Ministry of Finance accepted all 10 bids it received and borrowed Hr 8.1bn for urgent needs.
In general, this rate is even lower than the 12-month bills that were sold before the invasion, and reflects the willingness of Ukrainian banks to support the state at a difficult time. We hope that the investors will expand their range soon and increase borrowings.
RESEARCH TEAM: Taras Kotovych
Complete report (4 pages), https://icu.ua/en
