Bonds News

Russia plans to double state borrowing to plug budget holes

MOSCOW, Oct 1 (Reuters) - Russia plans to sell 2 trillion roubles ($26 billion) of OFZ treasury bonds in the fourth quarter, double the amount of state borrowing in the previous quarter, to fund its budget deficit, the finance ministry said late on Wednesday.

Russia is boosting state borrowing to compensate for a budget shortfall amid lower oil prices and the coronavirus pandemic. It is also planning to step up spending in the next three years to overcome the economic fallout from the crisis.

OFZ treasury bonds are popular among foreign investors, who hold about 30% of the bonds, thanks to their lucrative yields at a time of low interest rates worldwide.

Although it is not immediately clear who buys OFZs at weekly auctions, demand for the bonds is seen as gauge of investors’ attitude towards Russian assets and it remains strong despite the falling rouble.

On Wednesday, the finance ministry sold 175 billion roubles of OFZs after receiving bids worth 229 billion roubles.

In the third quarter, the ministry sold 1.24 trillion roubles of OFZs, more than its initial plan to sell 1 trillion. So far this year, Russia has raised more than 2.8 trillion roubles selling OFZs.

Over the next three years, the finance ministry expects to borrow about 10 trillion roubles and reserves the right to tap the Eurobond market for $3 billion a year, according to comments about its 2021-2023 budget plan released this week.

Russia was waiting for an opportunity to sell Eurobonds this year but the coronavirus pandemic and concerns about more sanctions against Moscow thwarted the plans. ($1 = 77.0170 roubles) (Reporting by Andrey Ostroukh and Darya Korsunskaya; Writing by Andrey Ostroukh; Editing by David Clarke)