Page 127 - RusRPTMar23

8.5 Fixed income
The share of foreign investments in Russian federal loan (OFZ) bonds dropped to 9.9% as of February 1, 2023, the Bank of Russia said on Tuesday. The indicator was at the level of 11.1% as of January 1, 2023, and 13.2% as of December 1, 2022. The par value of OFZ bonds held by nonresidents totaled 1.767 trillion rubles ($23.5bn) against the total market volume of 17.915 trillion rubles ($238.4bn).
The share of nonresidents holding Russian sovereign Eurobonds edged down to 45% in the fourth quarter of 2022, the Bank of Russia reports on Monday. The share of nonresidents was 47.5% as of October 1, 2022. The total share of Russian Eurobonds held by nonresidents declined by $636mn in terms of the par value to $16.307bn in the fourth quarter of the last year. The share of nonresident investments in Russian sovereign Eurobonds totalled 51.1% as of the end of the fourth quarter of 2021, and Eurobonds held by nonresidents stood at $19.959bn in the reported period.
Russia’s Ministry of Finance and the Central Bank of Russia (CBR) are drafting a new presidential decree which would oblige Russian issuers of Eurobonds to issue local substitute bonds, Vedomosti daily reported citing the representatives of the ministry.
Under the decree, it will become mandatory for the domestic issuers to issue local bonds replacing blocked Eurobonds.
As followed by bne IntelliNews, servicing both corporate and sovereign Eurobond issues is blocked, as Russian National Settlement Depository (NSD) was sanctioned by the European Union in the sixth sanction package.
In the meantime, major blue chip corporate issuers, most notably Gazprom gas giant, have been replacing Eurobonds issues with identical local bonds.
The head of the CBR Elvira Nabiullina also previously argued that replacement of Russian borrowers' Eurobonds by local bonds should become obligatory, but with the possibility of exceptions approved by the governmental commission.
Vedomosti reminds that associations of bondholders and large banks previously lobbied for such measures to support liquidity of the debt market and to replenish the balance sheets of market participants to be able to trade securities again.
However, some blue chip issuers oppose the agreement, such as Norilsk Nickel metals major, as it could arguably put the issuer into a double bind - issuing new local bonds without fully canceling the Eurobond issue still held in sanctioned depositories.
127 RUSSIA Country Report March 2023 www.intellinews.com