The National Depository of Ukraine (NDU) and the Central Securities Depository of Poland (KDPW) signed a cooperation agreement.

The goal is to establish correspondent relations between the NDU and KDPW for the Delivery of Securities Without Payment operations, which will allow for cross-border transfers of Ukrainian municipal bonds accounted by the NDU. KDPW will ensure the accounting of such Ukrainian securities in the depository system of Poland.

Today, bonds of the Kyiv, Kharkiv and Lviv City Councils are in circulation in Ukraine, with a total nominal value of over UAH 3.1 billion.

“Placing Ukrainian municipal bonds on the European market will help attract capital and create ways to increase the inflow of foreign investments into Ukraine. We are grateful to our Polish colleagues for the support of Ukraine that we have felt throughout our cooperation. During the extremely difficult months of the war, we actively worked to build a link that would expand the range of services for participants in the capital market of Ukraine. This initiative also contributes to Ukraine’s integration into the European financial space,” said Oleksii Yudin, Head of the National Depository of Ukraine.

“Since the outset of the war, Poland has supported Ukraine’s efforts to protect the country’s sovereignty and territorial integrity. Polish authorities, private businesses as well as public companies and institutions join the plan to recover from the war damage. The agreement between our central depositories is part of our support for the Ukrainian financial market, paving the way for Ukrainian local governments to issue municipal bonds on international markets,” said Maciej Trybuchowski, President of KDPW.

“Building a link with the Polish Depository is of great importance for us, because it directly contributes to strengthening the financial capacity of Ukraine. The strengthening of cooperation with our Polish partners is undoubtedly essential, as it facilitates the convergence of operational approaches between depositories. Thanks to the system of correspondent relations between the National Depository and KDPW, we will additionally receive the practical benefit of studying the best practices of the European depository for the Ukrainian market,” said Maryna Adamovska, Member of the Board of NDU.

“I firmly believe that the agreement between our institutions marks the beginning of long-term cooperation and will be useful for both the Ukrainian and Polish markets. The recovery of Ukrainian cities and the economy will require significant financial resources, and the capital market must play a pivotal role in this. We are very well prepared for this both infrastructurally and organisationally,” said Sławomir Panasiuk, Deputy President of KDPW.

In 2020, KDPW was certified and authorised under European CSDR standards, confirming its compliance with the European Union’s uniform legal requirements for central securities depositories. Therefore, as an important aspect of building correspondent relations with the Polish Depository, the National Depository of Ukraine passed the necessary procedures and checks required to open a correspondent account in accordance with CSDR requirements.

The link with KDPW was built with the active support of the National Securities and Stock Market Commission.

The National Depository is currently working towards the further expansion of correspondent relations with KDPW, including the possibility of accounting for corporate bonds and other financial instruments in order to expand alternative opportunities for our clients and attract additional investments into the economy of Ukraine.

Municipal bonds (local loan bonds) are bonds issued by local governments. Funds from the placement of bonds received by the issuer can be used to finance the development budget of local councils and create, expand or modernise strategic facilities in long-term use or facilities that city councils need in order to meet the interests of the residents of municipalities. This can become one of the sources of financing for the post-war recovery of Ukrainian municipalities.