The national Bank of Ukraine (NBU) and the Ministry of Finance has completed transactions in public debt (reprofiling) through the exchange of bonds of internal state loans (government bonds) owned by the NBU in the new bonds.
The total portfolio of government bonds owned by the NBU is now 360,6 billion UAH, of which reprofiling hit bonds face value 219,6 bln UAH. About 145,2 billion of the total portfolio of government bonds was converted to long-term hryvnia bonds of different maturity with reference of return with the rate of inflation, and about 74.4 billion UAH in long-term hryvnia bonds of different maturity repayment with fixed interest rates. The rest of the portfolio remained unchanged (with a fixed level of profitability).
“The bonds which were held reprofiling will occur evenly about 12 billion UAH per year until 2047. This approach to the repayment of principal will allow you to evenly distribute the load on the state budget for 30 years”, – said the Finance Minister Oleksandr danylyuk.
At the same time, the simultaneous presence of bonds with fixed and floating rates would ensure diversification of interest rate risk. That is, in the case of reduction of market interest rates, the Finance Ministry will pay less due to the presence of bonds with a floating rate and, in the case of a rate increase on the market the presence of bonds with a fixed rate will keep the cost of borrowing.
“However, the linkage of payments on the part of bonds with the rate of inflation, reprofiling will facilitate the conduct of prudent fiscal policy, consistent with the purposes of the NBU to ensure low and stable inflation”, – said the Deputy head of the NBU Oleg Churiy.
It is noted that the availability of bonds and fixed income of various maturities in the portfolio will allow the Bank to use for conducting monetary operations in the event of such need.