Moscow. 3 Oct. In Russia’s return to the capital markets this year believed, not all, but it still held – the Finance Ministry in may and September, has placed two tranches of Eurobonds worth $3 billion And if the first transaction of a sovereign borrower was not exactly simple (basic Eurobonds of the Russian Federation were not immediately admitted to settlement through the international Euroclear system), the recent placement was convincing even to the most skeptical observers.
How were chosen the moment for the second year out of the country for foreign markets, why the priority was given to foreign investors and what are the future plans of the Ministry of Finance borrowing in an interview on the sidelines of the Moscow financial forum said the Director of the Department of state debt and state financial assets of the Ministry of Finance of the Russian Federation Konstantin vyshkovsky.
– As the Finance Ministry has chosen the moment for the placement Eurobonds why you decided to enter the market in the end of last week?
– Our decision to enter the market influenced by a range of factors. In fact, technically we have long been ready to enter the market, but we had to choose the most favorable combination of conditions that would allow us to dorazmestit at the most competitive price. Of course, this has been influenced by the decision of the Federal reserve system, and the decision of rating Agency S&P (the improved Outlook for the sovereign rating of the Russian Federation), but you cannot say that one thing causes us to enter the market, we constantly analyzed the situation, and eventually took place on decent accommodation.
– Why did you decide to distribute paper among foreign investors?
We always proceeded from the fact that for the Russian investors we have Federal loan bonds, and Eurobonds – is primarily a tool for international investors. Therefore, while placements in foreign markets are always in priority order are met applications of non-residents.
If the location of the major release in may, we cut off Russian state-owned banks (in the transaction and the involvement of private banks and management companies from Russia and foreign investors), this time we decided to concentrate on foreign buyers. However, as you know, most of the issue (53%) was acquired by American investors is a very serious indicator of confidence in our sovereign debt securities. Actually, I think this location became one of the highest for all history of our transactions in foreign markets on the part of investors. And the level of foreign demand, and the cost of raising we managed to sleep as if were not for those two years, when Russia did not participate in foreign markets.
– Organizer of the placement – “VTB Capital” noted that major American investors in the placement were attracted, in particular, the possibility of settlement via Euroclear (the calculations on the main issue initially was conducted only via national settlement Depository). What other factors, in your view, affected the investor sentiment from the US?
– Of course, the fact that dopvypusk was immediately accepted for service Euroclear, significantly increased the attractiveness of the issue to investors. This time they had generally been much less pressure from foreign authorities than it was in may, when many investors received unofficial recommendations new Russian Eurobonds not to buy. To some extent we have corrected the situation and provided an opportunity for American buyers to satisfy their demand.
In 2013, the Ministry of Finance of the Russian Federation in addition to the dollar Eurobonds sold Eurobonds in euros. Next year, maybe, the volume of foreign loans will again be $7 billion You considering the location not only of dollar Eurobonds, but, for example, a Eurobond denominated in euros?
Dollar Eurobonds is our traditional tool that we offer to investors, here we have a clear and broad investor base. Yes, we have one outstanding issue denominated in euros, and in order to develop the yield curve of sovereign issues in that currency, in the future we can come to a decision to place the new issue in euros. It would be logical, and such securities may also be interest from investors.
– At what stage is the preparation of the debut issue of OFZ bonds in yuan? When the can held this location?
– Bonds in yuan there is a certain complexity because they must be included in the budget as foreign borrowing, and limit external borrowing for this year to $3 billion has been exhausted. Accordingly, in order to place this issue before the end of 2016, it is necessary that the state Duma has approved increase in the borrowing limit for this year. This will depend largely on whether we will be able to place these bonds until the end of the year. At least, such plans we have. Infrastructure under this deal and is actively preparing.
– On-former it is planned that it will be the accommodation in the “Moscow exchange”?
– Yes, it will Federal loan bonds in the Chinese currency posted on “Moscow stock exchange”, customers that have become major investors from mainland China. Someone said that it was easier to place bonds in yuan in the Chinese market – already had experience in a number of countries. But, in our opinion, for the development of the national market it is very important to hold such a position here, in Russia. The main purpose of host – the formation of a new segment of the Russian market, creation for Russian borrowers an alternative source of borrowed funds in new foreign currency.
– In continuation of the threads about new tools, last year the Ministry of Finance started to place OFZ bonds linked to inflation (OFZ-INS), but in the second and third quarters has not conducted any auction with this paper. You plan to offer this tool to the investors before the end of the year?
– We are ready to offer OFZ-IN at any time when we see demand for them from investors. Yet, due to the significant decline in inflation expectations of the market, we do not see demand, he shifted to other types of OFZs offered in weekly auctions. Before each auction we receive the opinion of the investors to understand what their expectations are, what papers will be needed under current conditions, and at the end make a decision what kind of bonds to offer.
So, when it will resume auctions for OFZ-IN depends solely on market demand for these securities.
– The Finance Ministry is planning new tools for the population. Tell us more about the release plans for BFL citizens.
– Volume of issue of this tool definitely will not be large – a few tens of billions of rubles. I would like to note that we do not see it as an instrument for implementing the borrowing program. The goal of this project is improving the financial literacy of the population, and it has nothing to do with plans to increase borrowing on the domestic market.
OFZ for the population will not have secondary treatment by their owners can only be individuals who will earn a higher return than on Bank deposits. For people who are not professional participants of the market, it is a kind of intermediate step from a traditional instrument of saving, which is a Bank Deposit, to a full-fledged securities which are traded on the market and investing in which is associated with increased risk.