State Debt in May 2020

The activity of investors in the domestic capital market is recovering. In May 2020, the Ministry of Finance successfully conducted all four planned auctions for the placement of domestic government bonds, as a result of which UAH 51.6 billion was attracted to the state budget. According to the results of auctions in May, a record amount of financial resources in the national currency was attracted - UAH 41.8 billion.

Against the background of growing demand, stabilization of the economic situation, the weighted average yield on domestic government bonds decreased, including 3-month bonds - by 11.26% in early May to 10.19% at the end of the month. The reduction of rates on six-month bonds was by 95 basis points, to 10.33% per annum.

During the reporting period, investors were offered foreign currency-denominated bonds only once. According to the results of the auction, which took place on May 19, USD 368.8 million was raised from the placement of six-month bonds (equivalent to the US dollar is UAH 9.8 billion).

In May, the Ministry has repaid the second issue of external government bonds under the US guarantee. The total amount of the payment was over USD 1 billion. 

Due to the reprofiling of the domestic government bonds in the NBU’s portfolio to the inflation-linked bonds back in 2017 today Ukraine saves a sufficient amount of funds on servicing the public debt. Thus, the bonds’ coupon rate in the portfolio of the NBU for a total of UAH 145.2 billion in the reported period amounted to 4.5%, compared to 12.6% coupon rate, which was before the reprofiling. The total debt principal payments during the reporting period amounted to UAH 43.2 billion, and debt interest payments were UAH 12.7 billion.

Fluctuations in the foreign exchange market in May were minimal (according to the NBU, hryvnia strengthened against the US dollar by about 0.3%). Accordingly, the impact on the state of the public debt was insignificant. The total public and state-guaranteed debt of Ukraine in the national currency equivalent increased by 0.59% to UAH 2,209.46 billion, and in the foreign currency equivalent - by 0.83% to USD 82.12 billion. USA.

Detailed information on the state of public and guaranteed public debt of Ukraine in March 2020 and other periods can be found on the official website of the Ministry of Finance at the link.