Page 94 - RUSRptApr17

8.5.1 Fixed income - govt funding plans
The Russian Finance Ministry has started the placement of “People bonds” that are only available to ordinary citizens through state-run banks Sberbank and VTB24. RUB0.7bn (€11.2mn) of the bonds were purchased as the new instrument was launched on April 26, with Sberbank expecting to sell half of the available bonds by the end of May. The head of the bank German Gref acquired the first issue, according to RBC business portal. The OFX-N federal loan papers or “people’s” bonds worth a total RUB15bn (€247mn) yield 7.5% return on the first coupon, rising 0.5% over six coupons until the maturity in 2020. The returns on the bonds are more than any on banking deposits and higher than the bonds bought by portfolio investors, Finance Minister Anton Siluanov told journalists, stressing that the return of 8.5% is more than double the level of annual inflation expected in 2017-2019. The RUB15bn amount to be sold in the pilot people’s bond issue is still negligible compared with the RUB1.2 trillion that can be raised in OFZ bonds annually by the ministry in 2017-2019, but the use of the instrument could be expanded. In March, the OFZ continued to be one of the most attractive emerging market papers, with foreign investors pouring a record RUB159bn ($2.8bn) into Russia’s local-currency debt.
94 RUSSIA Country Report April 2017 www.intellinews.com