Eurobonds of Russia

2017: Placement of release for $3 billion

For June, 2017 investors continue to consider eurobonds an attractive investment asset. The volume of new release of the Russian government securities was 3 billion dollars. Profitability of a 30-year tranche was predicted at the level of 5.5%, and 10-year-old – 4.5%, as a result of digit were even lower. At the same time demand from investors – 6.6 billion dollars – more than twice exceeded the offer so the Ministry of Finance could place eurobonds on бóльшую the amount.

The Minister of Finance Anton Siluanov considers that results of placement say about fast adaptation of the Russian economy to work in the conditions which changed after crisis and also that the structure of economy became healthier. According to him, in 2017 placement of eurobonds took place more successfully, than earlier to what the increased interest of investors in the Russian government securities also testifies. At the same time it is necessary to remember that placement of the Russian eurobonds happened against the background of discussion and decision making about prolongation of sanctions against our country.

For our fellow citizens attractiveness of eurobonds as investment asset first of all is explained by their high yield. In today's conditions when inflation keeps several months around 4%, banks reduce deposit rates. On an annual ruble deposit will hardly offer clients more than 8% per annum. Meanwhile, depending on repayment periods rates on the state eurobonds are 4-5% per annum, according to corporate papers – 6-8% per annum. And, as eurobonds are nominated in currency, payment of a coupon yield is also made in currency. Additional benefit of these securities is their high liquidity and lower level of risk in comparison with other financial instruments.

Nevertheless, foreign investors became the main buyers of the last tranche of the Russian eurobonds – they purchased 85% of the placed securities. It is indicative that there are more than a half of buyers – of the USA and Great Britain whereas only 9% of the purchased state papers were the share of buyers from the eurozone. Let's separately note demand for 30-year eurobonds – 95% of these securities were purchased by foreigners.

Coupon yield of new Russian eurobonds in the amount of 4.25% and 5.25% and also the low level of a public debt of Russia in comparison with GDP does attractive dollar investments in the Russian state papers. At the same time the risk of bankruptcy of the issuer seriously is considered by nobody.

Experience of successful placement of the Russian papers shows: demand from investors is least affected by peripetias of domestic policy or the international relations. Emerging markets became popular among investors again, they grow as the begun steady growth of economy of the developed countries guarantees in the long term stable demand for raw material resources, Oleg Yakushev, the expert AO IK of TsERIH Capital Management considers.

See Also

• Economy of Russia