This content was produced in Russia where the law limits coverage of Russian military operations in Ukraine
MOSCOW, Dec 8 (Reuters) – Russia is ready to offer more federal floating-rate bonds, Deputy Finance Minister Timur Maksimov said on Thursday, and plans to offer a range of debt instruments to meet its 3.5 trillion rubles ($55.64 billion). borrowing target in 2023.
The Department of Finance matched its record for the largest volume of OFZ bonds sold at a single debt auction on Wednesday, continuing to borrow heavily amid an oil price cap that could squeeze revenue from export entered into force.
Russia had planned to raise up to 3.26 trillion rubles this year. After suspending debt auctions for more than six months, the government borrowed heavily in the last quarter.
The central bank was forced into an emergency rate hike to 20% in the days after Russian troops were sent to Ukraine in February, but has since eased monetary policy, lowering it to 7.5% .
Maksimov said that the Ministry of Finance expects the market situation and rates to return to target levels. Analysts polled by Reuters expect the Bank of Russia’s key rate to end next year at 6.75%.
“Today’s returns will look very attractive,” Maksimov said. “Therefore, in such a situation, we are ready to offer a greater volume of floating rates and our confidence is demonstrated by our actions in the OFZ market.”
Yields on Russia’s 10-year OFZ bonds stood at 10.14% on Thursday. Yields move inversely to prices.
“We’re willing to take on that interest rate risk because today, in our view, all things being equal, it’s unreasonably costing us.”
Floating-rate bonds, dubbed “floaters” and whose interest payments move in line with benchmark yields, raised the majority of funds in record debt auctions in November.
Foreign investors’ holdings of OFZ bonds are at their lowest in a decade and Russian banks have taken over, said Gleb Shevelenkov, director of the debt market department at MOEX Group, which operates Russia’s largest stock exchange, on Thursday. .
“Banks carry the (OFZ) market on their shoulders,” he said, noting that Russian banks bought 86% of OFZ bonds offered in October and November.
Last year, Russian banks accounted for 72% of the OFZ primary market, his presentation showed.
($1 = 62.9000 rubles) (Reporting by Darya Korsunskaya and Elena Fabrichnaya; Writing by Alexander Marrow; Editing by Susan Fenton, Jason Neely and Arun Koyyur)