The National Bank of Ukraine and the Ministry of Finance of Ukraine have finalized the re-profiling of the domestic public debt through the exchange of the domestic bonds held by the National Bank for new bonds.
The total volume of the domestic bonds held by the National Bank is currently equal to 360.6 billion hryvnas. 219.6 billion hryvnas of them were subject to re-profiling. A part of the total volume of the domestic bonds amounting approx. 145.2 billion hryvnas was changed for long-term bonds denominated in hryvnas with different maturity periods and the interest rate depending on the inflation rate. Bonds amounting approx. 74.4 billion hryvnas were changed for long-term bonds denominated in hryvnas with different maturity periods and a fixed interest rate. The rest of the domestic bonds remained without changes (fixed interest rate).
“The re-payment on the re-profiled bonds will be progressing in equal amounts – approx. 12 billion hryvnas per year till 2047. This will make it possible to distribute the load on the state budget evenly for 30 years”, Minister of Finance Oleksandr Danyliuk.
Under this scheme, a combination of bonds with fixed and flexible yield will ensure the diversification of the interest rate risks. Hence, with the market interest rates falling the Ministry of Finance will be paying less thanks to the bonds with the flexible yield, while the bonds with the fixed yield will stabilize the debt price in case if the interest rates are on the rise.
“At the same time, through the adjustment of the interest rates on a part of the bonds to the inflation rate, re-profiling will contribute to a well-balanced fiscal policy complying with the National Bank’s efforts to keep inflation low and stable”, deputy Head of the National Bank Oleg Churiy said.