Bonds

Ukrainian government bonds are obligations of the Ministry of Finance of Ukraine. Accordingly, all payments are guaranteed by the state, represented by the Ministry of Finance of Ukraine. The probability of default by the Ministry of Finance of Ukraine is extremely low, but sovereign risk exists.

The profitability of buying government bonds depends on the maturity of the bonds (time to maturity) and the current market situation. A good reference point for understanding the current situation is our quotation sheet. As a rule, long-term government bonds yield more than short-term ones.

Of course, one of the main advantages of investing in domestic government bonds is that we have a relatively liquid market for domestic government bonds in our country and in case of unforeseen circumstances, you can sell your bonds within 1 to 1 week. In this case, the selling price will be lower than the purchase price, but in about 1-2 months after the purchase, even the sale of your government bonds will be made for more than the purchase price and you will receive income.

The redemption of foreign currency domestic government bonds is made in the currency of issue. Accordingly, if you have purchased USD or EUR-denominated bonds, all coupons and redemptions for these bonds will be transferred to you by the depositary institution in the respective currency.

In general, the risk profile of foreign currency domestic government bonds is identical to that of conventional domestic government bonds. However, there is no denying the fact that, unlike hryvnia domestic government bonds, where Ukraine acts as an issuing center, Ukraine is not the same in the case of foreign currencies. Accordingly, there is a regulatory risk in the form of unexpected decisions by the issuer. An example of such an unexpected decision could be the repayment of liabilities denominated in foreign currency in hryvnia at the NBU exchange rate. Such an outcome is unlikely, but possible.