Page 79 - RusRPTJun21

in 15-year loans at a rate of 4-5%. The rules currently state that the share of funding from the NWF cannot surpass 20% of the total, but MinFin plans to raise the bar to 40%.
The amount of NWF funding appears to be in line with what we have previously seen. The current mix of oil prices and the RUB/$rate could bring in an additional RUB2.6-2.7trln in oil and gas revenue in 2021 and RUB1.7-2trln in 2022-23. The construction of infrastructure could raise Russia’s economic potential in the mid-term, but this could come with a significant delay, as was the case in 2019. Currently, if these seven projects are adopted right now, funding could come as soon as 2022. The question of funding also remains vital, and we think it will likely come from SOE sources rather than purely private ones. With all these things in mind, we would expect some upside risks to economic dynamics in the mid-term and the easing of the pressures on the ruble coming from the execution of the fiscal rule, which should help to strengthen the RUB/$rate.
6.1.3 Budget dynamics - govt funding plans
The Ministry of Finance placed 15-year Eurobonds for 1 billion euros at 2.65% on May 20 and placed additional Eurobonds maturing in 2027 for 500 million euros at a price of 98.5% of par, which corresponds to a yield to maturity of 1.37% per annum. Finance Minister Anton Siluanov said that the aggregate demand exceeded 2 billion euros, foreigners bought 52% of the fifteen-year issue and 35% of the additional issue. This is the first Russian issue of 15-year Eurobonds (previously the Ministry of Finance placed a maximum of 12-year issues).
According to the estimate given to the publication by Dmitry Dorofeev, portfolio manager of Alfa Capital, the fair rate of return for the new issue in 2036 is 2.35–2.4% per annum, for the issue with maturity in 2027 - about 1.28%. Thus, the placement was completed with a premium of about 0.3%
Foreigners bought almost half of the Eurobonds, which are government debt coupons denominated in euros, that the Finance Ministry issued on Thursday. Despite the ban on American financial institutions purchasing Russian government securities, European banks accounted for a large portion of the order book.
Foreign banks bought the bulk of the longer-term bonds on sale, accounting for 53% of the total — a positive sign for Russia’s Finance Ministry, which had previously stated that it was looking for the best opportunity to join the Eurobond market since November.
6.1.4 Budget dynamics - National Projects
The government has still not published the updated the 12 national projects, nor the National Goals Strategy that supersedes it.
The latest announcement was a decree issued February 3, allocating responsibility for a Strategy of Socio-economic Development to 2030. This will
79 RUSSIA Country Report June 2021 www.intellinews.com