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Inclusion of Ukrainian hryvnia govt loan bonds in JP Morgan GBI EM index to start on March 31, 2022 – Finance Ministry
KYIV. Oct 13 (Interfax-Ukraine) – Ukrainian hryvnia government domestic loan bonds may be included in the GBI-EM GD index starting March 31, 2022 with an approximate share of 0.12%, the Ukrainian Finance Ministry said with reference to JP Morgan Global Index Research.
"Initial inclusion in all three series of GBI-EM will have one series of bonds that meet the requirements of the index – government domestic loan bonds with a coupon of 15.84% and maturity in February 2025 (UA4000204150)," the Finance Ministry said on Wednesday.
According to it, this decision was influenced by a significant increase in foreign investment in Ukrainian government domestic loan bonds since the launch of the link with Clearstream in 2019, which allowed non-residents to occupy over 10% of this market.
JP Morgan Global Index Research, referring to investors, also noted the improvement in market liquidity over the past two years, although it pointed to a long process of opening an account in Ukraine, which could take several months.
"Inclusion in the index will begin on March 31, 2022, in order, if necessary, to provide investors with sufficient time to establish access to the market and accounts in Ukraine," the ministry said.
According to Government Commissioner for Public Debt Management Yuriy Butsa, the inclusion of hryvnia government domestic loan bonds in the JP Morgan GBI EM index will help achieve the goals of Ukraine’s Medium-Term Public Debt Management Strategy. "We would like to have more instruments in hryvnia, suitable for the index, so we will issue all bonds in hryvnia with a maturity of over four years in an amount sufficient to be included in the JP Morgan GBI-EM index," Butsa said.
According to the Finance Ministry as of October 1, the volume of the specified series of government domestic loan bonds since the initial placement in June 2019 reached a nominal amount of UAH 41.08 billion (equivalent to $1.559 billion at the current exchange rate). It meets the criteria of a minimum outstanding amount (from $1 billion) and a maturity (from two and a half years).
Ukraine is also being considered for inclusion in the "narrow" GBI-EM indices, which include securities without regulatory or tax impediments. As it was specified, the share of Ukraine in JESG GBI-EM may also be 0.12%, GBI-EM Div – 0.22% and GBI-AGG Div. – 0.02%.