Page 2 - bne_newspaper_April_5_2019

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April 5, 2019 www.intellinews.com I Page 2
Foreign investors bought just over half of all Russia's OFZ bonds issued in 1Q19
But the threat of new sanctions lead to bond traders selling off some RUB500bn of OFZ that saw the foreign investor share in the outstanding bonds fall from a record 34% in April to 25% by the end of 2018. That could be a problem for Russia’s Ministry of Finance that relies heavily on the OFZ to fund the government’s operations.
That’s all changed now. The sanctions threat is still there, but after the US Federal Reserve bank made it clear earlier this year it will not continue to tighten its monetary policy investors are “risk on” again and increasingly hungry for yields. Russia’s OFZ have been selling like hot cakes in the first quarter, in contrast to last autumn where the ministry had to cancel several auctions due to the lack of demand. The share of foreigners in the OFZ is already back to 30% and the ministry of finance is already planning to increase the number of bonds on offer this year and possible double the overall issues year-on-year in 2019.
"Last Wednesday capped the most successful quarter for the Russian Finance Ministry on record in terms of primary borrowing on the local market. A total of RUB513bn was raised in new bonds versus the RUB 450bn planned, all without causing havoc on the secondary market," Rosbank said in a note on April 2.
Foreign investors bought RUB249bn ($3.8bn) of OFZ in January-March 2019, or just over half of all the bonds on offer, the central bank said in a report on April 1.
“A significant part of the inflow of foreign capital was targeted at the state bond market. In January, February and March, foreign investors bought
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,220
3%
14%
MOEX
2,536
2%
7%
MSCI EM
1,081
3%
12%
S&P
2,879
3%
16%
NASDAQ
7,892
4%
20%
DAX
11,988
3%
14%
FTSE
7,402
4%
10%
Commodities
Price, $
1M YTD
Brent
69.3
6%
28%
WTI
62.1
10%
37%
Urals
74.2
-4%
65%
Gold
1,292
0%
1%
Silver
15.2
0%
-2%
Nickel
13,040
-1%
23%
Copper
6,444
0%
8%
Aluminum
1,871
1%
0%
FOREX
Value
Russia sectors performance % YTD
1M YTD
EUR/RUB
73.37
-2%
-7%
Russia sectors performance % YTD
Oil & Gas Utilities Financials Consumers Telecoms M&M RTS MOEX
9
13
18 15
14.1 7.0
10
10
0 5 10 15 20 25
Source: MOEX, BCS GM
source: MOEX, BCS GM
Sectors: % return YTD