Special aspects of using hybrid financial tools for project risk management in Ukraine

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The relevance of the article is due to the need of using non-traditional tools for capital raising and hedging financial risks in Ukrainian conditions that allow investors to protect themselves against possible losses during the entire life cycle of the investment project. The study is based on the National Bank of Ukraine statistical data, data of Ukrainian commercial banks, as well as on the authors’ calculations based on empirical and economic-statistical methods. According to international practices, hybrid financial instruments were classified and the special aspects of their use in Ukraine were studied to manage the risks of project financing. Specific features of using the structured bonds for financing investment projects are determined based on the synthetic securitization scheme. The experience of Ukrainian banks was analyzed and the necessity to use financial instruments such as guarantees and letters of credit in risk management of project financing was substantiated. It has been established that forward contracts, currency swaps and over-the-counter currency options are the most acceptable instruments for hedging foreign exchange risks of project financing. Further studies of the problem should include the need for legislative regulation of using hybrid financial instruments, as well as methodological and regulatory support for the risk management of project financing at all stages of the investment project implementation.

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    • Table 1. Conditional calculation of the income of a bond issuer and an investor when using convertible bonds (on an annualized basis)
    • Table 2. Calculated expenditure structure for issuance of corporate securitized bonds in Ukraine (in terms of bond issuance equal to USD 50 mln)
    • Table 3. Letters of credit transactions of Ukrainian banks in 2016–2017 (at the beginning of the year)
    • Table 4. Use of currency derivatives by Ukrainian banks to hedge currency risks in the period 2012– 2017, USD mln