December 22, 2017 / 9:49 AM / in 6 months

UPDATE 1-Russia to give priority to Russian buyers of 2018 Eurobond

(Adds details, quotes)

By Polina Nikolskaya

MOSCOW, Dec 22 (Reuters) - Russia will give preference to domestic investors when it sells a fresh tranche of sovereign Eurobonds next year, Finance Minister Anton Siluanov said on Friday.

Sovereign Eurobonds will be issued as part of President Vladimir Putin’s order to repatriate some of the assets that Russian businesspeople currently hold abroad.

Reuters reported this month that wealthy Russians facing the prospect of targeted U.S. sanctions next year had floated the idea of a special treasury bond to help create favorable conditions for them to bring their cash home.

Putin confirmed the Reuters report by ordering on Thursday to place these new bonds in 2018. He said the central bank along with the government had been working on the issue.

Siluanov on Friday said the Finance Ministry would offer its regular Eurobonds to those who wanted to repatriate funds.

“In this particular case, of course, we will give priority to our domestic investors,” Siluanov said of his ministry’s plan to sell Eurobonds in 2018 in the light of Putin’s order.

The Finance Ministry could also consider increasing the amount of Eurobonds on offer from the planned $3 billion if it sees strong demand for the papers, Siluanov said. In this case, it would trim the offer of rouble treasury bonds, known as OFZs, a third of which is held by foreigners.

For now, demand for Eurobonds from those who want to repatriate funds is seen at between $1 billion and $3 billion, Siluanov said.

Sources had previously told Reuters that it was crucial, unlike with bank accounts, that future holders of such bonds be able to remain anonymous.

Russia will also welcome foreign buyers of its Eurobonds next year, Siluanov told reporters on the sidelines of an annual gathering of the ruling United Russia party.

“Of course it is important for us that the order book is filled with highly qualified foreign investors,” he said.

Russia plans to use its usual infrastructure for the Eurobond deal. Russian banks will act as organisers, while the Russian National Settlement Depository - a local version of Euroclear - will settle the deal, Siluanov said. (Reporting by Polina Nikolskaya; Writing by Katya Golubkova; Editing by Andrey Ostroukh and Alison Williams)

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