Page 102 - RusRPTNov20
P. 102
8.5 Fixed income
The Finance Ministry has placed RUB346bn ($4.4bn) worth of OFZ federal bonds at an auction of October 8 (RUB316bn of bonds maturing in 2030 and RUB30bn maturing in 2025), making 20% of quarterly borrowing plan of RUB2 trillion.
This was a record weekly placement, following the record September issuance of RUB833bn.
As reported by bne IntelliNews, at the beginning of 2020 OFZ issues were in record-high demand on expectations of lower interest rates and the Finance Ministry was said to be preparing to expand the issuance massively.
Russia’s Ministry of Finance intends to double the issuance of OFZs this year from the usual RUB2 trillion to circa RUB4.4 trillion to create extra resources to fight the coronacrisis.
However, it has recently been argued that as foreign investors are pulling out of OFZ segments on rise in geopolitical risks, Russian banks alone could soon no longer be able to support the ambitious OFZ borrowing plans.
Nevertheless, the large systemic banks increased the share in OFZ auctions from 57% in July to 83%, according to the latest data by the Central Bank of Russia (CBR) cited by Vedomosti d aily on October 9.
Russian banks thus invested about RUB700bn in OFZ in September, with the largest state-controlled Sberbank buying RUB463bn worth of federal bonds or 55% of total government's target.
Analysts surveyed by Vedomosti n ote that the banks are helped with the recent CBR monetary easing, reinvesting the cheaper funding into OFZ (current average yields of 5.8%), as the quality of the borrowers in the real sector is not improving.
102 RUSSIA Country Report November 2020 www.intellinews.com
