Ukraine War Bonds Prove Hard to Buy for Global Investors

(Bloomberg) -- Ukraine is getting inundated with requests from investors from around the world to get in on an auction of securities to help fund its military. The problem is the war itself is complicating their ability to buy the bonds.

Ukraine is on Tuesday auctioning so-called war bonds -- 1-year hryvnia-denominated notes, whose coupon isn't yet set. The securities are set to be similar to other local debt sold by the government.

Ukraine's finance ministry cut off access to its website from abroad to avoid cyber attacks, making it difficult for investors to get access to information. Concerns over the settlement process for the bonds and the information haze mean that some international bond funds will remain on the sidelines at Tuesday's auction, according to three people familiar with portfolio mangers' thinking, who asked not to be cited by name because they aren't cleared to speak publicly on the matter.

While auction results are expected around 5 p.m. in Kyiv (3 p.m in London), the Finance Ministry said earlier on Tuesday that was considering more debt sales to tap the international investment community's “big interest” in helping Ukraine defend itself. It asked investors to inquire directly at the country's primary dealers about auction details.

The war bond is the latest effort by Ukraine to raise money as it faces off against Russia's far bigger military force. It's already shared details of crypto wallets to raise money via Bitcoin and other tokens, and the country's central bank set up a special account last week to accept donations in multiple currencies.

The sovereign's junk-rated dollar bonds advanced, with the 2033 tenor trading at 35 cents on the dollar, compared with about 34 cents on Monday. Ukraine faces payments of about $300 million in coupons on six foreign-currency notes issued in 2015, as part of its debt restructuring following Russia's annexation of the Crimean peninsula.