Local Government Bonds: 30 Years of Resilience and Reliability

Today marks 30 years since the first auction of domestic government bonds in Ukraine was held.

On March 10, 1995, the first domestic government bond issuance took place, marking a significant milestone in the development of the Ukrainian financial market. While the modern history of government bonds in Ukraine began in the 1990s, this financial instrument has much deeper roots. As early as the beginning of the 20th century, the government of the Ukrainian People's Republic issued government bonds.

During the first auctions held in 1995 (a total of 28 auctions), domestic government bonds worth 30.4 billion karbovanets were issued. The nominal value of a single bond was 100 million karbovanets (equivalent to 1,000 UAH).

Initially, domestic government bonds were primarily targeted at banks and government institutions, but over time, the market expanded, attracting a broader range of investors. A major challenge for Ukrainian government bonds came during the financial crisis of 1998. Despite difficult conditions, Ukraine fulfilled its debt obligations to investors.

Over the years, domestic government bonds have become a crucial instrument for financing the state budget while also serving as a reliable investment option for citizens. With the support of World Bank experts, Ukraine implemented reforms in the primary market, bringing it closer to global best practices. A significant step forward was Ukraine’s accession to the international depository system Clearstream in 2019, which expanded capital-raising opportunities and enhanced the integration of the Ukrainian securities market into the global financial system.

However, the true test—and a new chapter in domestic government bonds history—came on February 24, 2022. The full-scale war changed everything, but the financial system endured, and bonds became an essential economic weapon. They became a key source of funding for defense needs. Thanks to the issuance of wartime bonds, the state was able to raise funds for Defense Forces, while citizens could support their country by investing in its future. Today, purchasing wartime bonds is just a few clicks away, available through banks and various applications, including Diia.

Over the past 30 years, domestic government bonds have been issued under market conditions for a total of more than UAH 3.3 trillion.

Domestic government bonds remain the most reliable financial instrument in Ukraine. They help preserve and grow savings, as their yield mitigates the effects of inflation: 15.1–16.8% annually in UAH, 4.5% in USD, and 3.2% in EUR. Additionally, the state guarantees a 100% of invested funds, and income for investors is tax-exempt. 

30 years of domestic government bonds is a story of financial resilience, adaptation, and growth. From the first issuances in the challenging 1990s to the wartime bonds that today help bring victory closer, they remain a symbol of stability and trust in the state.