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 Azarov will Repay Foreign Debt with the Use of the Population's Funds

The government has approved the mechanism of investing the people's funds into the government's currency treasury bonds.

Kommersant-Ukraine writes that in the nearest future Ukrainians will be able to invest into the currency treasury bonds of the government (TB). Last week the Cabinet if Ministers registered a decree # 836 instructing the Ministry of Finance to issue unregistered securities in the total volume of $200 million. As it was planned, the TBs issued in the certificated form will have a 2-year term of circulation and be nominally priced at $500. The obligations will be issued in two equal series A and B. The sale, profit payout, and redemption will be conducted in cash or non-cash form in the currency of issuance.

Each bond contains four semi-annual coupons the profit for which constitutes $23 which is 9.2% annual. This is above average for bank dollar deposits which is 8.12% right now.

The flotation will be conducted by the Oshchadbank that has the widest branch system - 5,860 offices. It can also attract other institutions to the process.

The population's funds can be used for the extinction of the state's foreign debt. "You can attract funds in international markets or in the internal market. The people have a lot of currency on their hands - theoretically you can acquire about $10 billion with the help of this instrument", says the Ukrainian Analytic Center President Oleksandr Ohrymenko. The Market participants consider the profitability of the state securities rather attractive but the terms are to long. They doubt whether the investors will be able to easily share them, since Oshchadbank is not obliged to buy them out. It does so at its own discretion.

 
 
 
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