When it comes to funding itself, US guarantee or no US guarantee, troubled Ukraine which by most accounts is on the verge if not already embroiled in a civil war, appears unable to gain much traction. Some headlines from today confirming this:
- UKRAINE FAILS TO SELL 3-MONTH USD NOTES AT AUCTION
- UKRAINE FAILS TO SELL 9-MONTH UAH NOTES AT AUCTION: MINISTRY
So what is the desperate for cash nation to do? Why pull a page straight out of Uncle Sam's war playbook: play to people's patriotism and issue "military" bonds, of course. Interfax reports [4]that the Ukrainian Finance Ministry is to make issues of two-year government "military" bonds with worth 1.1 billion hryvni at an annual interest rate of 7%.
In other words, Uncle Sergey Want You To Buy Bonds!
[5]
According to government resolutions published on Tuesday, the first issue is non-documentary government bonds with a face value of 1 billion hryvni. The second one is documentary treasury bonds with a face value of 100 milion hryvni.
The yield on the bonds issued at a face value of 1,000 hryvni will be paid every six months. Unless, of course, Ukraine pulls a Movie Gallery and between its payments to Gazprom, and paying its military to avoid some unhappy soldiers, defaults before even the first payment is made.
More:
The National Savings Bank has been chosen to act as a general agent for allocating and servicing the circulation and redemption of the treasury bonds and will receive 0.5% from the par value of the sold securities. To maintain liquidity, it is allowed to buy back the treasury bonds at a price not below their par value.
"Such a proposal is an appeal to the community to unite in their efforts, wishes and intention to join the process of resolving national problems and providing financial help to national armed forces in order to increase their combat readiness and boost the country's defensive capabilities," the Finance Ministry said in its earlier announcement of the "military" bonds.
The next question: will these bonds be subject to locate, and which repo desk will have them in inventory as soon as possible, so the less patriotic elements can short the Ukraine "military" effort against Russia?