The west should guarantee Ukraine’s war bonds — Jonathan Guthrie, associate editor at the Financial Times
Ukraine has issued about $300mn of war bonds in hryvnia to support its fightback against Russia. But what Ukraine needs now is much larger financing in dollars or euros guaranteed by the west. — Jonathan Guthrie, an associate editor of the FT and the head of Lex, wrote, reminding us of the war bonds that were sold by western governments to retail investors during World War II under the slogan “Lend to Defend.”
Traditional international bond markets are closed to Ukraine now. Even if fresh issuance were possible, the implicit required coupon rate of around 25% would be unaffordable for Ukraine.
However, the blanket guarantee, which could come from the US or the EU, would lever foreign private capital into the war effort, supplementing cash aid from foreign governments. Meanwhile, banks could structure and syndicate the deal on a pro bono basis.
“A victory for Ukraine would be a victory for the free world. By increasing the chances of that outcome, the bonds could be regarded as social impact investments,” Guthrie suggests.