Topline
Amid the massive human and economic toll of Russia’s ongoing invasion, Ukraine’s plan to raise additional funds for its war effort and reconstruction by offering bonds to retail investors abroad could see “big interest” if it comes to fruition, according to one analyst reached by Forbes.
Ukraine has reportedly held talks with both the United States and Europe about the proposed bond … [+]
Key Facts
Ukraine is seeking to offer “peace bonds” to retail investors across the United States and Europe as the country explores new avenues of funding for its war effort and reconstruction, Bloomberg first reported.
EU and Ukrainian officials have already held talks about how to implement a sale of the new bonds in different member countries and Kyiv has also spoken with the U.S. Securities and Exchange Commission, sources told the publication.
Getting approval for bond sales to retail investors abroad can typically be a lengthy process and Ukraine has not yet released full details about its proposed offerings.
Ukraine’s financial ministers have so far struggled to reach a wider pool of retail investors abroad: Although the country has been selling bonds since shortly after Russia’s invasion began, only institutional investors and pension funds have been able to buy them.
Despite only top-tier investors being able to buy Ukraine’s debt so far, there is significant interest from abroad—as investors from around the world have been asking the country’s finance ministry since last month how they can get those bonds as well.
If the proposed bond offerings do come to fruition, people are “very receptive” to helping Ukraine and that would likely draw “big investor interest,” says Sam Stovall, chief investment strategist at CFRA.
What To Watch For:
“I would tend to think that Ukraine should be able to get pretty ample funding” from retail investors if everything pans out, says Stovall. The big uncertainty, he adds, is what kind of backing there would be for these bond offerings—that is, whether Ukraine is solely responsible for repayment, which is “fairly speculative,” or if there is financial backing from EU nations, which lowers risk. “This way, investors are helping Ukraine and hopefully getting their money back, which would be a win-win situation.”
Big Number:
$500 billion. That’s how much Ukraine said it would need for reconstruction efforts, while losses from the ongoing military conflict are in the tens of billions of dollars, sources told Bloomberg. The IMF recently predicted Ukraine’s economy will shrink 35% this year, while other experts forecast the country’s economy could shrink by as much as half due to the fallout from Russia’s invasion.
Tangent:
The latest news comes on the same day that President Joe Biden announced that the United States will send a further $800 million in military aid and $500 million in economic support to Ukraine. America’s aid to Ukraine has now surpassed more than $3 billion, mostly in weapons, since Russia invaded the country on February 24.
Further Reading:
Biden Announces Another $1.3 Billion In Aid To Ukraine (Forbes)
Source: https://www.forbes.com/sites/sergeiklebnikov/2022/04/21/ukraine-peace-bonds-could-draw-big-interest-from-retail-investors/