What are military bonds and how do they work

What are military bonds and how do they work

Since the beginning of the full-scale invasion of Ukraine by the Russian Federation, the Ministry of Finance of Ukraine has started issuing military bonds. In this article, we will tell you what military bonds are, what they are, and why it is profitable to buy them.

Military bonds: what are they

War bonds are bonds issued after the start of the war. They differ from ordinary OVHZ in that the funds from them go to support the economy during martial law. Military bonds have a certain period of validity. On the day of payment, the deposit is returned with interest.

In essence, military bonds are an investment instrument to support the state budget, available to citizens, businesses and foreign investors. Funds from bonds, attracted to the state budget, are used for uninterrupted provision of the state's financial needs under martial law — social and defense. Until August 2022, only military bonds had a secondary market.

How does a military bond work

The mechanism of placement of military bonds does not differ from the process of placement of ordinary bonds. Every Tuesday, the Ministry of Finance of Ukraine holds an auction of primary placements. About 10 of the country's largest banks — primary dealers — are directly participating in this auction. Prior to the auction, primary dealers collect bids from their clients to participate in the auction.

Read also: How to start investing in Ukraine in 2023

Legislation

After the beginning of the full-scale war of the Russian Federation against Ukraine on February 24, 2022, in March, the Ministry of Finance started auctions for the sale of military bonds. The main regulatory acts regulating the issuance of bonds, including military bonds, are:

Issue of military bonds in Ukraine

Military bonds are issued in accordance with the debt policy of the Ministry of Finance of Ukraine. There is no regular bond issue schedule.

What are the military bonds in Ukraine

You can buy military bonds with an investment term of 3 months to 2 years.

Important: the longer the repayment term, the higher the interest.

Military bonds at the time of writing:

ISIN code of military bondsMaturity periodType of security (discount/coupon)Maturity dateLast date of placementRate
Hryvnia
UA40002262609 monthscoupon09/27/202328.02.202315%
UA40002259081.5 yearscoupon25.10.202306/28/202211.5%
UA40002264501 hourcoupon13.03.202430.05.202318.27%
UA400022776310 monthsdiscount05/01/202411.07.202318.00%
UA40002262861 hourcoupon06/26/202407/04/202318.00%
UA40002276561.5 yearscoupon15.01.202529.08.202318.35%
UA40002284491.8 yearscoupon18.06.202509/19/202318.31%
US dollar
UA40002274746 monthsdiscount26.10.202305/09/20234.75%
UA40002270038 monthsdiscount28.12.202304/25/20234.80%
UA40002274091 hourdiscount21.03.202430.05.20234.85%
UA40002278471 hourdiscount06/20/202407/25/20234.71%
UA40002285061 hourdiscount09/05/202409/19/20234.79%
Euro
UA40002275409 monthsdiscount22.02.202405/09/20233.15%
UA40002275571 hourdiscount05/16/202406/20/20233.11%*

*current data as of September 21, 2023, according to information from the Ministry of Finance of Ukraine.

Advantages of military bonds

A military bond is a priceless investment that will return peace, good, and interest. This is your investment in victory. Investors' money goes to finance the needs of the Armed Forces and support the economy of Ukraine during wartime. In general, the advantage at the moment is that no proof of income is required when purchasing military bonds.

FC Daliz-Finance LLC has the ability to purchase military bonds on the secondary market, as well as the experience of purchasing military bonds through primary dealers. In the first months of the war, our clients bought military bonds worth more than 500 million hryvnias. Join their number by submitting an application on our website.

Read also: How to find and choose a broker: professional tips for an investor

Frequently asked questions: what are military bonds in Ukraine

What is the difference between military bonds and ordinary bonds

After August 2022, there is essentially no difference between military and ordinary bonds. The only significant difference between them is that citizens of Ukraine have the opportunity to purchase military bonds through the Diya portal, but in this case, there is no opportunity to sell these bonds. If you buy such bonds through a broker, there is an opportunity to sell them.

How much can be earned on military bonds

Earnings on military bonds depend on the investment amount and maturity: the interest rate is higher on long-term bonds.