Russia to return to domestic debt markets in September – Deputy Finance Minister

Russia to return to domestic debt markets in September – Deputy Finance Minister

This content was produced in Russia, where the law limits coverage of Russian military operations in Ukraine.

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MOSCOW, Sept. 8 (Reuters) The Russian government plans to raise money in the domestic debt market this month after a seven-month break in borrowingsaid Deputy Finance Minister Timur Maksimov Thursday.

Maksimov told a financial forum in Moscow that the Ministry of Finance plans to launch ruble-denominated OFZ . to offer bonds in September, test the market’s appetite with low volumes of fixed income bonds first.

Russia suspended borrowing through OFZ bonds, which it uses to plug budget gaps, in February, weeks before launching what it calls a “special military operation” in Ukraine that led to unprecedented Western sanctions against Moscow.

Our tactic for the foreseeable future, in a few weeks, will be to test the market with very limited volume. We are probably talking about 10-20 billion rubles ($164-328 million), no more,” Maksimov said.

“We will aim for a maturity that does not overload our repayment schedule,” he added, saying the Treasury Department prefers to place longer-term bonds.

Maksimov said the new bonds would offer fixed yields rather than floating rate coupons.

The finance ministry’s future loan plans would depend on the parameters of a new fiscal rule that the government could announce soon, Maksimov said.

The budget rule determines how much of Russia’s revenue from oil and gas exports is used for day-to-day government spending and how much is funneled into the government’s sovereign wealth fund. It is designed to smooth out periods of boom due to fluctuations in energy prices and stabilize the value of the ruble.

It was suspended earlier this year and President Vladimir Putin ordered the government to come up with revised terms for the rule that better suit Russia’s new financial situation.

Putin said on Wednesday he expects the country to run a budget surplus by 2022, amid high prices for Russia’s vital energy exports and a smaller economic blow from sanctions previously feared.

In April, Moscow forecast a deficit of 1.6 trillion rubles ($26.28 billion) and said it would tap its National Welfare Fund (NWF) on rainy days to close the gap.

(Reporting by Andrey Ostroukh and Darya Korsunskaya; Writing by Jake Cordell; Editing by Mark Trevelyan)

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