Page 12 - RusRPTDec20
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● Ministry of Far East and Arctic Development. Alexey Chekunov, Head of the Far East Development Fund (a subsidiary of VEB), will take charge of the ministry.
2.5 Russia’s Ministry of Finance issued a $3bn Eurobond with “perfect timing”
Russia’s Ministry of Finance issued a $3bn Eurobond on the international capital markets to strong demand on November 12 with what analysts called “perfect timing.”
MinFin took advantage of the bump in investor sentiment that followed the announcement by US pharmaceutical company Pfizer that it has developed an anti-coronavirus vaccine with 90% efficacy that lead to a rally in the Russian stock market, the ruble and the price of oil in the last days on the hopes that the world economy will return to some sort of normalcy in 2021.
“Another example today of perfect timing for eurobond placement by Russian Minfin, much like for the previous 2 placements,” tweeted Tatiana Evdokimova, the chief economist at the Joint Vienna Institute and former chief economist at Nordea Bank.
The issue was the first Eurobond offered by Russia this year as the government seeks to ramp up lending to cope with the extra spending on Russia’s public health sector and an economic stimulus package.
MinFin is planning to double its borrowing and unusually increase Russia’s indebtedness from around 14% of GDP this year to around 20% rather than tap into the $172bn held in the rainy day National Welfare Fund (NWF) but most of that borrowing has been on the domestic market.
The Ministry plans to increase the issues of Russian Ministry of Finance ruble-denominated OFZ treasury bills from circa RUB2 trillion ($25.9bn) to RUB4 trillion this year before domestic borrowing falls back to circa RUB2.5 trillion next year, according to the recently approved 2021-2023 budget.
Russia borrowed more than $4bn in ruble treasury bonds during its weekly auction this week, fulfilling the fourth-quarter borrowing plan of RUB2 trillion ($25.82bn).
However, Russia usually issues about $3bn in Eurobond a year, partly to provide a sovereign benchmark against, which Russian corporate Eurobonds can be priced.
The Eurobond also makes a useful additional source of funds for the government looking to make up for the circa 4% of GDP budget deficit expected this year. Once economic growth returns next year the deficit is expected to recover to -2.4% in 2021.
12 RUSSIA Country Report December 2020 www.intellinews.com
