The government has allowed to issue bonds (OFZ) not only in rubles but also in national currencies of the BRICS countries and the Shanghai cooperation organization (SCO), says the decision published on Monday, December 19, on the official website of the government.
Authorities are trying to find alternative sources of borrowed funds in the terms of existing international sanctions. “This will allow us to issue new debt instruments regulated by Russian law, relying on domestic financial institutions,” reads the description to the resolution.
The creation of a regulatory environment for bonds in the currencies of the BRICS countries and the SCO can be considered as one of the aspects of the Russian “turn to Asia” for closer cooperation with Asian investors, says the chief economist of the Eurasian development Bank Yaroslav Lissovolik. “The demand for such securities may be high, but not at first issue. First, the new Federal loan bonds will be issued, rather, in the test mode,” he says.
According to Lisovolik, the most important can be denominated in Chinese yuan. “In China, the most wide range of investors, plus the Renminbi as IMF reserve currency, which increases confidence in him,” says Lissovolik.
October 1, 2016, the Chinese yuan has become the fifth currency included in the IMF’s currency basket, which sets the course of a unit of Fund’s SDR. In addition to the yuan in the basket are the US dollar, Euro, British pound and Japanese yen.
The Bank of Russia also included the Chinese yuan in the list of reserve currencies. According to the latest disclosed data, the share of the RMB in international reserves of the Central Bank at the end of 2015 amounted to 0.1%.
Prospects for the deployment of Russian OFZs in other currencies of BRICS countries in addition to the yuan still look vague, said the chief analyst of Nordea Bank Olga Lapshina. “The issuance of bonds, for example, in Indian rupees or Brazilian reals is not even discussed, unlike yuan. Most likely, placement in these currencies if and will occur no sooner than 2018,” says Lapshin.
In early October the Director of the Department of public debt of the Ministry of Finance Konstantin vyshkovsky said that Russia may deploy first issue of OFZ bonds in RMB the amount of $1 billion by the end of 2016. But at the end of October, Finance Minister Anton Siluanov said that plans to enter the market of borrowings in RMB to the end of 2016 the Ministry of Finance no. In 2016, the limit of external loans of Russia amounted to $3 billion, in 2017, it could grow to $7 billion.