The placement of federal loan bonds resumed in April
The Russian Ministry of Finance plans to place federal loan bonds for a total amount of 600 billion rubles. Before that, auctions had already been held: three in April and May, and four in June. Auctions are held on Wednesdays, but the exact dates are still unknown.
The Ministry of Finance intends to bring to the market several types of bonds: the securities for 250 billion rubles, the period of circulation of which is 5 years, for 250 billion rubles for 5-10 years, and for 100 billion rubles, which are valid for 10 years.
At the beginning of this year, the relevant ministry placed OFZs for the amount of 600 billion rubles. During the first two months, 501 billion rubles worth of securities were placed on the market, and in March the procedure was suspended. The Ministry of Finance explained the pause by the fact that at the moment the budget has enough capital to carry out standard operations. In addition, the excessive amount of securities may adversely affect the debt market in a period of high volatility in the financial segment.
Auctions resumed in early April, then placed PC bonds series 29013, but the proposed price was low and they were declared insolvent. In addition to these government securities, were also presented OFZ-PD in the amount of 16.5 billion rubles, issued under the series 25084, valid until October 2023, and OFZ-IN series 52002 to 5.5 billion rubles, the maturity of which in February 2028.
It was planned to replenish the budget by 2.3 trillion rubles in gross equivalent by 2020 through the placement of government bonds, while the net equivalent should amount to 1.74 trillion rubles. However, the Russian authorities made a number of changes to the budget in March. According to these amendments, the government has the right to replace the lack of funds in the state budget through borrowings, domestic or foreign. It is allowed to exceed the maximum debt limit.
In late January, the largest purchase of government bonds in the history of their placement took place at the auction. The papers of the entire issue worth 58 billion rubles were purchased by a foreign investor, whose name is kept secret. OFZ-26229 is calculated until November 2025. The application from an anonymous buyer was satisfied at 2 b.p. discount to the secondary market, where the cut-off price yield is 5.97% per annum. This became the main news of the market and surprised the domestic participants of the auction.
Despite the instability of the country’s economy, it still remains interesting for foreign businessmen. Now about 35% of capital in government securities belongs to foreign investors. At the auctions, they buy about 50% of the issued bonds.