Russia has begun placing a RBS15bn sovereign bond aimed at ordinary citizens, a measure aimed at raising more revenue for the country’s budget.
The bonds, offered for sale by state-run banks Sberbank and VTB24 offer 7.5 per cent returns on the first coupon date, rising by 0.5 per cent over six coupons until the bond is repaid in 2020.
Russians bought Rbs696m in the bonds on Wednesday, according to Moscow exchange data. Sberbank said clients applied to buy Rbs912m in the bonds. The bank expects to sell its half of the bonds in the next month.
“The average return citizens will get on this paper will be more than on existing bank deposits and higher than on bonds bought by portfolio investors,” said finance minister Anton Siluanov. “The return on the bonds is about 8.5 per cent, it’s more than double the projected level of inflation for this year and the next three.”
Clients of the state banks are the latest investors to join a rush on markets for Russia’s ruble-based sovereign bonds, known as OFZs. About 30 per cent of the Russian OFZ market in 2017 is held by foreign investors seeking some of the highest returns on emerging markets, a higher total than before low oil prices and western sanctions sparked a recession in 2014.