War bonds – what you need to know before investing

War bonds – This is a special type of OVGZ. The main purpose of the issue of military bonds – support of the economy of the state and the Armed Forces during the war or hostilities. Therefore, the state creates conditions so that as many citizens as possible can purchase war bonds.

What are war bonds

First of all, you should familiarize yourself with the official definition of the term “Ukrainian domestic government bonds” (OVGZ). OVGZ – these are securities placed exclusively on domestic capital markets and confirming Ukraine’s obligations to reimburse the bearers of these bonds for their nominal value with the payment of income in accordance with the terms of placement of bonds. That is, government bonds – This is a type of debt securities issued to attract additional financial resources for the needs of the state budget. The issuer (issuer of securities) of government bonds is the Ministry of Finance of Ukraine.

In turn, war bonds – This is a special type of OVGZ. The main purpose of the issue of military bonds – support of the economy of the state and the Armed Forces during the war or hostilities. Therefore, the state creates conditions so that as many citizens as possible can purchase war bonds.

People buy war bonds from the state for a certain price, and after the maturity date, the state returns the money to them, and also pays the accrued interest.

Thus, it is quite appropriate to consider the purchase of government bonds, including military bonds, as an alternative to a bank deposit.

War bonds - what you need to know before investing

It is also important that the redemption of war bonds is fully guaranteed by the state, which makes them one of the most reliable securities. In fact, the only risk for a potential investor in such bonds – this is the risk of Ukraine not paying its debts, that is, default.

It should be noted that paper war bonds do not exist. The circulation of war bonds is carried out exclusively in electronic form.

We emphasize once again that by buying war bonds, you help the functioning of the state here and now, from helping the Armed Forces of Ukraine to supporting the work of state bodies and local governments. At the same time, a person who buys war bonds, after the maturity date, will be able to return his money and make a profit in the form of accrued interest. Thus, war bonds can be seen as an aid to the state and as one of the ways to save your own money during the war.

Real War Bond Yields

War bonds yield 9.5% (three-month bonds), 10% (six-month bonds), and 11% (1- or 1.3-year bonds). Dollar bonds for one year are issued with a yield of 3.7%, euro bonds — with a yield of 2.5% per annum. That is, without even delving deeply into the kitchen of buying and selling securities, it is clear that now war bonds will not make much money, and at best will only help reduce the depreciation of savings from inflation.

In reality, the return on investment in bonds, taking into account the costs of opening and maintaining an account, as well as commission to the seller, with investment amounts from UAH 100 to 200 thousand, can be even lower than today’s deposit rates (up to 6%). It is realistic to approach even the nominal yield only when buying bonds worth more than a million hryvnias.

The only real benefit of war bonds — return of invested funds together with interest is guaranteed by the state in full and is not subject to taxes. In the conditions of war — this is an important advantage, but today it does not even allow you to save your savings.

War bonds - what you need to know before investing

Course swing

The situation with the exchange rate of the national currency deserves special attention. After all, the real yield of debt securities directly depends on the situation on the foreign exchange market. Today, the hryvnia has dipped quite sharply, and its prospects are very vague.

The fact is that from the first days of the full-scale invasion of Russia, the NBU fixed the exchange rate at the pre-war level of 29.3 UAH / USD. and forbade banks to deviate from it by more than 10%. However, on the “black” and “gray” markets, the rate began to rise gradually. Entrepreneurial Ukrainians immediately took advantage of this. People crossed the border, withdrew currency from card accounts there at a rate close to the official one, and returning to Ukraine exchanged it at the rate of 35−36 UAH/USD. According to the NBU, in this way the country’s financial system began to lose up to $100 million a day.

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In order to stop this “foreign exchange tourism”, the National On May 21, the bank on May 21 abolished the requirement for a maximum 10% mark-up on the official exchange rate when selling cash and gave banks a free hand in terms of setting the rate according to which banks debit hryvnia funds from customer accounts if customers use hryvnia cards abroad. Also, the NBU reduced the monthly limit for withdrawing cash abroad from hryvnia accounts opened in Ukrainian banks by 2 times — from 100 thousand to 50 thousand UAH. Decoupled from the official rate, the cash exchange rate instantly soared, coming close to UAH 40/USD in exchange offices.

However, to draw conclusions about the “real” the value of the national currency is still early. The answer to this question can only be given by a freely operating legal segment of the foreign exchange market, including trading on the foreign exchange market, which is not currently being held. Bankers promise that the cash exchange rate in Ukraine after the removal of restrictions by the NBU will stabilize within 10-15 days, when the “white” and «gray» the markets will even out and become almost the same. Most likely, at the end of May, the exchange rate in bank exchange offices will stabilize at the level of 34−37 UAH/USD. However, the rate will not return to UAH 30.


The war, of course, objectively negatively affects the exchange rate of the Ukrainian currency. The destruction of infrastructure, the fall in GDP, and the increase in government spending both for the needs of the army and for financing social benefits are making themselves felt. Partially, this is now done through various emission mechanisms.

Moreover, one of the main mechanisms for issuing the hryvnia is the same military bonds. On March 8, 2022, the NBU board determined that the central bank would buy back war bonds if necessary and thus finance critical government spending. Purchase limit — UAH 400 billion Many financial experts immediately sounded the alarm about this. Indeed, in practice, this means an additional issue of hryvnia not supported by goods, which does not work for business development.

In reality, the Cabinet of Ministers uses the funds received from the sale of military bonds to finance military and social spending. However, to say that money does not work in the economy is a mistake, because as a result, the funds go to the accounts of enterprises and citizens, respectively, and they spend them, supporting the demand for goods and reviving the economy of Ukraine. Thus, the NBU’s purchase of war bonds in today’s conditions even helps the country’s economy. The fact is that the current level of inflation is associated, rather, with a lack of quality supply and a break in the supply chains of goods, while demand has decreased significantly, because people objectively spend less due to lower incomes and the need to save.

Today, the National Bank finances only critical budget expenditures and is going to abandon this budget financing mechanism as soon as possible. To do this, the Ministry of Finance should stimulate market demand for military bonds and gradually shift the burden of budget financing from domestic banks and the NBU to real investors.

War bonds - what you need to know before investing

Market rates

The first step is to raise the stakes. Recall that the rate on war bonds today is much lower than even the current inflation. Taking into account all the financial risks in a country at war, an attempt to keep yields at such low levels makes war bonds a non-market instrument. And only market financing, combined with people’s trust in the state and international financial support, can save the economy of Ukraine.

The IMF, the G7 countries, the EU and the US announced multibillion-dollar financial assistance to Ukraine, including to cover holes in the budget. The funds will be provided to the government in foreign currency, which should psychologically strengthen the position of the hryvnia, as these resources will increase Ukraine’s gold and foreign exchange reserves and, in theory, support the national currency. This can create ideal conditions for turning war bonds into a real market instrument for financing the army and the warring Ukraine.


Summarizing the above, we note that investing in military bonds – this is an investment in the independent future of our country, which is now defended by the people of Ukraine. And today it is one of the most effective and reliable ways to bring our common victory closer.

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Name: Mykola

Surname: Siutkin

Email: siutkin@sp.agency

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