Placement of Eurobonds of the Ministry of Finance may weaken ruble, says a leading analyst of PSB Alexey Egorov. “Assuming that the Ministry of Finance the dollars will be allocated to the reserves, and the money will be printed rubles, it is a negative factor for the national currency,” he says. Agree with him, the analyst of Raiffeisenbank Denis Poryvai: “the Ministry of Finance, in fact, will not take dollars from foreign investors, and from the Russian banking system. Dollars will be less, and rubles more”. Poryvai says that the placement of Eurobonds for $1 billion could weaken the ruble against the dollar by 25 to 50 kopecks.
The pressure on the ruble will occur due to the fact that the main buyers of Treasury securities will be the Russian banks accumulated on their accounts significant volume of ruble and foreign exchange liquidity, not foreign investors, I believe Egorov and Poryvai. Sberbank CIB analysts Tom Levinson and Iskander Lutsky in his review praised the participation of foreign investors in the placement of 10-15%, the rest, unable to buy up banks.
“In fact, the MOF can take up to $3 billion, who are the banks, reducing their supply of liquidity”, — says the analyst “Veles the Capital” Ivan Manaenko, who also believes that such a placement of Eurobonds — an unfavorable factor for the ruble. According to Manaenko, if the banks need the currency to return it to CBA or to conduct transactions for customers, they would have to go to the exchange to buy dollars.
Levinson and Lutsk from Sberbank CIB believe that the placement of Eurobonds could affect the exchange rate of the ruble weakened against the dollar. “We do not expect that the Eurobond issue will significantly affect the exchange rate, however, it is possible that it contributed to increased demand for the dollar in the last session on the exchange,” they write in their review. On Tuesday, may 24, during the morning trading session, the dollar rose to 67.15 RUB against the closure at the level of 66,8 yesterday. After 12:00 Moscow time the ruble began to strengthen again against the background of growing prices of oil, 18:40 GMT, the dollar dropped to the level of 66,56 RUB.
The participation of foreign investors in the purchase of Russian Eurobonds, says Poryvai, the opposite would be supportive for the ruble. “If the dollars when placing flowed from foreign markets, it would strengthen the ruble,” he says. Chief analyst of investment Department VTB 24 Stanislav Kleshchev believes that the positive effect of the ruble lies in the fact that the borrowed dollars are converted into rubles.
Successful placement of Eurobonds can strengthen the investors ‘ interest in rouble assets, says Manaenko. “Investors around the world can reassess the risks to Russia and that have a positive impact on our currency,” he explained.
According to the chief economist for Russia and CIS “Renaissance Capital” Oleg Kuzmin, the influx or withdrawal of the country amounts to about $5 billion could change the dollar on 1 rouble.
Monday, may 23, the Ministry of Finance announced the placement of 10-year dollar-denominated Eurobonds, the benchmark yield of the new issue of 4.65–4.9% per annum.