On 24 February 2022, the Russian Federation initiated an illegal, unprovoked and unprecedented full-scale military assault on Ukraine which is actively ongoing. This act of aggression has required the Ukrainian government to take immediate and decisive measures to resist the attack and to stabilise and support the functioning of the state, especially its military. Therefore, one of the key priorities is the financing of the Ukrainian army.

To raise the required financing and support the army, the Ministry of Finance has decided to issue series of war bonds that can be purchased both by Ukrainian legal entities and individuals, and foreign investors who want to support Ukraine. These bonds can be nominated and purchased either in UAH or USD with a payback period of one year.

The most recent auction on 15 March 2022 generated huge interest. During the auction, the Ministry of Finance issued and placed bonds worth a total of UAH 5.1 billion and USD 12 million. The interest rate for the military bonds in UAH was set at 11%, and the rate for USD was at 3.7%.

Military bonds are traded through primary dealers that participate in auctions held by the Ministry of Finance in the interests of their clients. Among the primary dealers are two international and two local banks. In particular, the local banks include Оschadbank and PrivatBank. International banks acting as primary dealers are Citibank and Raiffeisen Bank. More detailed information on the list of the primary dealers can be found at this link: https://mof.gov.ua/en/perelik-pervinnih-dileriv.

For direct purchases, a foreign investor has to follow these steps:

  • choose and conclude an agreement with a Ukrainian broker with primary dealer status (the Broker);
  • open a securities account in one of the Ukrainian depository institutions;
  • place an order with the Broker.

If they do not have direct access to Ukrainian depositary system or brokers, foreign investors can also consider using their foreign custodians as intermediaries in the process. Several foreign custodians have access to the Ukrainian depositary system through nominee accounts foreign custodians hold with Ukrainian custodians. These foreign custodians are able to purchase and hold Ukrainian securities on behalf of their clients without the need for their clients to open Ukrainian accounts. Ukrainian war bonds can also be purchased via Clearstream.

Ukrainian war bonds are attractive financial instruments that significantly support Ukraine and its army, while at the same time providing good yields to investors.