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DOMESTIC GOVERMENT LOAN BOND

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* Fields marked with an asterisk are mandatory

Domestic government loan bonds (hereinafter referred to as DGLB) are government securities that are placed exclusively at the domestic market.

DGLB confirm obligations of Ukraine to repay the holders of these bonds their nominal value by paying income in accordance with the terms of the bond placement.

DGLB:

  • is a reliable and profitable tool;
  • a security issued by the Ministry of Finance of Ukraine to cover deficiency payments of the state budget;
  • government guarantee for 100% of outstanding DGLB;
  • liquid secondary market (possibility to sell or buy in advance at the secondary market).

DGLB nominal values:

  • issued in UAH, USD, EUR
  • nominal value: 1000 UAH, 1000 USD, 1000 EUR
  • for a period of 3 months to 5 years
  • discount or interest rates

DGLB rates on the primary market when placed by the Ministry of Finance of Ukraine (according to July 2019 placement data) *:

  • UAH – 15,0%-15,95%
  • USD - 3,0% -5,5%
  • EUR - 1,25%

*may change

Form of DGLB issuance

The DGLB turn-round is carried out exclusively in documentary form. They are accounted for in securities.

What do you need to buy DGLB:

1. To sign a brokerage agreement with the Bank and provide the Bank with identification documents.
2. To open a securities account in a depository institution and submit a reference to the Bank.
3. Send funds to the Bank for the purchase of DGLB.

Tax treatment of individuals with DGLB:

  • Interest income on DGLB is not taxed on personal income tax (clause 165.1.2 of the CCU)
  • Investment income from DGLB transactions is not taxed on personal income tax (Sec. 165.1.52 of the Tax Code)
  • Interest income and investment income on DGLB is taxed only with a military fee of 1.5%
  • Investment income includes interest income in the form of a coupon and investment income (the difference between the purchase price and the amount of money received from the sale / reimbursement of DGLB).

To make a purchase you can contact:

Nataliia Lozynska, 0 800 30 30 50, Natalija.lozinskaja@asviobank.ua
Olena Hudyash, 0 800 30 30 50, elena.khudijash@asviobank.ua

To open an account in securities you can contact:

Maryna Matsiborska, 0 800 30 30 50, marina.matsiborskaja@asviobank.ua
Nataliia Luchina, 0 800 30 30 50, natalja.luchina@asviobank.ua

Download presentation:

DGLB for corporate clients

DGLB for individuals

GENERAL INFORMATION ABOUT DGLB

JSC "ASVIO BANK" is glad to announce the beginning of active work with domestic government loan bonds (hereinafter - DGLB).

How to buy DGLBs, what are their pros and cons, benefits for individuals and corporate bodies from investing in DGLBs?

DGLBs are government securities that are placed exclusively on the domestic market. DGLBs confirm the obligation of the State of Ukraine to reimburse to the bearers of these bonds their nominal value with payment of income in accordance with the terms of placement of the bonds. In other words, government bonds are the placement of money, not only on deposit, but in government securities, against guarantees of the state with a guaranteed % rate fixed upon placement.

Moreover, there are some peculiarities regarding the taxation of personal income (investment income) - only 1.5% of the military levy is charged. For comparison, under investment of funds by an individual on deposit - an income tax of 18% and a military levy in the amount of 1.5% are charged.

Thus, DGLB today is a rather attractive tool for playing at the stock market. But before you are coming into to play, you need to know the rules.

How to make money on DGLB?

Therefore, a DGLB is the debt security without certificated form of issue, and a security is a document of the established form with appropriate details, certifying monetary or other property rights, defines the relationship between the issuer of the security (the person who issued the security) and a person, who holds the rights to a security and provides for the performance of obligations under such a security, as well as the possibility of transferring the rights for the security and the rights upon the security to other persons. The Issuer is the Ministry of Finance of Ukraine.

At the same time, government bonds are issued in three currencies - hryvnia, US dollars and euros. The repayment is carried out in the currency of nominal value, respectively, the nominal amount of value of one bond is 1000 UAH / dollars / euro. Types of DGLB are interest-bearing (with income payment in compliance with a coupon within a certain period of time) or discount (purchased below face value, income is in nominal).

In general, as a tool of investment, the government bonds are interesting to those corporate bodies and individuals who can invest the amount starting with 50 thousand UAH. It should be noted that the minimum value of the exchange lot is 15-20 thousand UAH (depending on the rules of a particular exchange). At this, it should be taken into account that the accompanying expenses for opening an account in securities, broker's commission, and other accompanying expenses associated with the acquisition of DGLB. The table below shows the costs of acquiring government bonds by a corporate body or by an individual.

Who can buy government bonds?

Potential investors, both corporate clients and individuals, still believe that this tool is inaccessible to them, and only banks and professional stock market participants can work with it.

In fact, all it takes to open a securities account, is to sign a brokerage agreement with a securities trader, select the desired securities and buy them. The rate of return in hryvnia is 16.55-16.99% p.a., in US dollars - 6.25-7% p.a., in euros - 4.5% p.a.

The holders of DGLBs also acquire rights: to hold, to dispose, to get profit, etc. The right of disposal makes it possible to carry out other DGLB transactions, not just to wait for redemption - this is the right to sell at any time without loss of % with a return of at the current time, the right to fix the US dollar or euro by buying foreign currency DGLB for hryvnia, or vice versa - invest in hryvnia by fixing the bet in advance. It also gives a right to place / raise funds in a repo under the DGLB without selling the DGLB package, which gives the opportunity to generate additional income. And considering the changes in currency legislation, as of February 7, 2019, DGLBs issued in foreign currency can be purchased both in UAH and in foreign currency (but only through merchants - banks).

Features of DGLB

There are also some "nuances" of investments in DGLB. As they are securities, in accordance with Clause 170.2.1 of the Tax Code of Ukraine (hereinafter referred to as TCU), during performance of operations with investment assets and during performance of operations of the sale / redemption of such assets, it is required to file a tax return, namely Appendix F1.

However, if someone expresses consternation about the self-filing of the tax return, it should be noted that now it can be done quite easily - through the electronic office at https://cabinet.sfs.gov.ua

The resource interface is quite simple and accessible, you need to make a request to the system for information about collected and paid by tax agents for your income from individuals from the form # 1-DF. Once received, the system will automatically upload the data to income tax return.

Hereafter, these data should be verified, signed and sent via electronic mail to the STI. In order to sign the declaration and enter the system, an electronic-digital key is required - and this can also be easily done through the Privat24 system (with a Privatbank card). This key can be generated in 5-10 minutes.

Where to start?

So, for many people, investing in DGLB is a new financial possibility. In a certain manner, this can even be compared to the decision to change the seat from public transport to the driver's seat of your own car - when you begin to take responsibility for yourself without shifting it to the driver. At the beginning it is terrifyingly, you see nothing but the road ahead, but very quickly - you begin to see rear-view mirrors, communicate, and then you realize - you are capable of more than you thought!

Hastily, the investing in government bonds is not just an investment in another tool, but a kind of self-challenge, the beginning of opening something new, namely the stock and interbank market, budgetary forecasts of Ukraine, etc. Yes, it is definitely a more complex tool than a regular deposit, which requires us to analyze the pros and cons. It is more complex and at the same time more profitable.

So, if you have decided to try yourself in the new sphere of investments in government bonds, please consult the experts of JSC "ASVIO BANK" on securities trading and depository activity of the Investment Business Department:

- receiving information on acquisition (merchant) - Nataliia Lozynska, 0 800 30 30 50, natalija.lozinskaja@asviobank.ua

- opening of securities account (depository institution) - Maryna Matsiborska, 0 800 30 30 50, marina.matsiborskaja@asviobank.ua

Comparative table on the allocation of resources on deposit or DGLB for individuals

Description of the operation

The amount of investment, UAH

Deposit income, UAH (14% p.a.)

DGLB income, UAH (15,95% p.a.)

The difference, UAH

1

Resource allocation*

100 000

12 250

14 000

+1 750

2

Subsequent expenses upon resource allocation**

 

 

2 372

- 2 372

3

Payment of taxes (PIT - 18% and ML - 1.5% on deposit and ML - 1.5% on DGLB)

 

2 389

174

+ 2 214

4

Total (payable)

 

9 861

11 453

+ 1 592

* for calculation we accept the highest rate on the deposit of the state bank in the amount of 14%, and on the DGLB - 15,95% (minimum rate of allocation on the primary market) for a period of 1 year

** associated expenses for allocation of resources in DGLB include merchant's commission and depository institution's services (Broker's commission - UAH 1000; one-time commission for opening a clearing sub-account in the Settlement Center (when conducting exchange operations) - UAH 122;

opening of securities account (one-time commission) - 200 UAH; placing DGLB to the securities account - 50 UAH; accounting of the securities storage (monthly) - 50 UAH * 12 = 600 UAH; unblocking of DGLB - 50 UAH; repayment of DGLB (withdrawal from an account) - 200 UAH; Payment of funds (income), performance of the function of tax agent - 150 UAH. Total expenses for depository institution - 1250 UAH.

 

Comparative table on the allocation of resources on deposit or DGLB for corporate bodies

Description of the operation

The amount of investment, UAH

Deposit income, UAH (14% p.a.)

DGLB income, UAH (15,95% p.a.)

The difference, UAH

1

Resource allocation*

1 000 000

120 000

140 000

+20 000

2

Subsequent expenses upon resource allocation**

 

 

5 672

- 5 672

3

Total (payable)

 

120 000

134 328

+ 14 328

* for calculation we accept the highest rate on the deposit of the state bank in the amount of 14%, and on the DGLB - 15,95% (minimum rate of allocation on the primary market) for a period of 1 year

** associated expenses for allocation of resources in DGLB include merchant's commission and depository institution's services (Broker's commission - UAH 1000; one-time commission for opening a clearing sub-account in the Settlement Center (when conducting exchange operations) - UAH 122;

opening of securities account (one-time commission) - 300 UAH; placing DGLB to the securities account - 100 UAH; accounting of the securities storage (monthly) - 300 UAH * 12 = 3600 UAH; unblocking of DGLB - 100 UAH; repayment of DGLB (withdrawal from an account) - 300 UAH; Payment of funds (income), performance of the function of tax agent - 150 UAH. Total expenses for depository institution - 4550 UAH.