Official: Russia may offer $3 bln more Eurobonds in 2018

MOSCOW, Mar 27 (PRIME) – Russia may offer U.S. $3 billion more Eurobonds until the end of 2018, allocating $2.2 billion of the placement to cover budget deficit, head of a Finance Ministry’s department Konstantin Vyshkovsky told reporters on Tuesday.

On March 16, the ministry sold U.S. $1.5 billion of U.S. dollar-denominated 2029 Eurobonds at 4.625% and reopened a 2047 Eurobond with a $2.5 billion issue that it sold at 5.25%. Of the $4 billion raised, the ministry spent $3.2 billion to buy back 2030 Eurobonds, and allocated the remaining $800 million to the budget.

“The Finance Ministry has the right to offer a total of $7 billion of new securities in 2018, of which $4 billion should be placed under swap deals, and $3 billion should be raised for the budget. We’ve allocated $800 million to the budget, and have $2.2 billion left,” Vyshkovsky said, adding that the next offer may amount to $2.2 billion if the ministry decides not to swap more Eurobonds.

The ministry will not offer more Eurobonds that mature in 2047. The ministry already has $7 billion of these Eurobonds in circulation, which is too much, and Russia’s sovereign debt redemption will already be at its record high in 2047. “This is a very long-term prospect, but we simply have to think about it as we are a reliable borrower. So, there will definitely be no more offers of these Eurobonds,” he said.

The ministry is also interested in offering euro-denominated Eurobonds in 2018 if there is good demand for them of at least several hundred million euros, he said.

INFLATION-TIED OFZ BONDS

The ministry registered an increase in interest to OFZ-IN bonds, or OFZ federal bonds with the yield pegged to inflation. The ministry plans to place the securities in two stages – at an auction, and then through the bid book. The first stage is more common for local investors, while foreign investors are more familiar with the second one, Vyshkovsky said.

The ministry wants to offer OFZ-IN bonds regularly, hence the idea of the two-stage offerings. The planned combined amount of the offer of OFZ-IN bonds for 2018 is 150 billion rubles, he said.

OFZ FOR HOUSEHOLDS

The offer of OFZs for households will not grow significantly this year.

“We’ve always said that this instrument should not be seen as the main instrument of the state debt program…The target audience here is people who have never even owned securities or placed their funds on a banking deposit. The main goal here is to raise people’s trust to the state. This will not be a fast process taking into account our history,” he said.

Previously, Prime Minister Dmitry Medvedev ordered the ministry to work out measures to raise the offer of OFZ bonds for households. Vyshkovsky said that the ministry was working on that. “But so far, our understanding is that these measures are of a technical character and that they are unable to raise the offer significantly,” he said.

End