NBU facilitates purchase of eurobonds of IFIs, sovereigns with ratings 'АА-'/'Аа3' for banks

The National Bank of Ukraine (NBU) has permitted banks to place foreign currency in highly liquid foreign loan tools with high credit rating under the relaxed rules, without receiving personal licenses, the regulator has said on its website.

The amendments to the rules of issuing personal license to invest abroad are outlined in NBU Board resolution No. 406 dated November 22, 2016.

According to the document, the authorized bank is to have a general license for buying and placing foreign currency on the international markets. The issuer of the foreign loan tools is to be an international financial institution (IFI) or a country from G7. In addition, the issuer is to have rating no lower than 'АА-'/'Аа3' from Fitch Ratings, or Standard&Poor's, or Moody's on the date of purchase of the securities.

Loan securities are to be nominated in the U.S. dollars, Japanese yen, euros, pound sterling and Canadian dollars, and the period between the date of their purchase and the maturity term cannot exceed five years.

According to the changes, banks can buy the securities and sell them later only to nonresidents outside Ukraine.

The NBU said that the amendments would help banks to increase the yield from placing foreign currency and reduce credit risks linked to keeping foreign currency on correspondent accounts at correspondent banks.