№ 1/2017

Fìnansi Ukr. 2017 (1): 75–89https://doi.org/10.33763/finukr2017.01.075

MARKET OF FINANCIAL SERVICES

KAMINSKY Andrij ¹, BRATKOVA Ivanna ²

¹Taras Shevchenko National University of Kyiv
²State Educational and Scientific Institution “Academy of Financial Management”

Introduction of indexed to inflation government bonds in Ukraine: pro et contra

Abstract. The role of government securities in the financial system of Ukraine and their place in the investment market are studied in the article. Low liquidity of government bonds in Ukraine, a poor structure of the investors and negative trends in the economy make it necessary to consider other instruments of public loans. It is proposed to introduce indexed to inflation government securities in the Ukrainian market. A comprehensive analysis of the introduction of such securities is also presented. An economic substantiation of expediency and perspective introduction of such government securities are given. Taking into consideration a historical rate of inflation in Ukraine and high inflation expectations by market participants, a high rate of discount bonds with fixed payments will be counted. From the perspective of the issuer (state in case of bonds) it is cheaper to issue index-linked bonds. Investors also seek to minimize the risks of buying government securities, and will consider the asset when building securities portfolios. The article suggests the introduction of indexed to inflation government bonds according to the “Canadian model” using a special index to make inflation indexing. Although there are some inconsistencies in the way of introducing such bonds,a number of advantages of their issuing include: provision of the compensation effect counteracting the inflation risk, reducing the cost of government borrowing, stimulation the interest of institutional and individual investors, increasing the efficiency of monetary policy. From the perspective of investors the various options of investment and the place of offered bonds among them are analyzed.

Keywords:government securities, indexed to inflation bonds, the risk of default on government bonds, index of inflation indexation.

JEL: G10, G11, E31.

Kaminsky A. . Introduction of indexed to inflation government bonds in Ukraine: pro et contra / A. . Kaminsky, I. Bratkova // Фінанси України. - 2017. - № 1. - C. 75-89.

Article original in Ukrainian (pp. 75 - 89)

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