Russia’s finance ministry has raised nearly $ 1 billion in a government bond auction today, returning to markets after a two-week hiatus due to a sell-off in Russian markets amid the escalation of the Ukrainian crisis, according to Reuters.
The ministry has been forced to cancel weekly government bond auctions twice this year, citing increased market volatility. However, with the ruble mitigating its losses, it returned to the markets sending a message that the climate is normalizing.
The total demand in today’s auction reached 102.9 billion rubles ($ 1.35 billion) with the Ministry of Finance raising 74.7 billion rubles ($ 982.41 million) in maturity bonds in 2029, with an average yield of 9 , 59%. This was the most successful auction since August.
“The market is returning after the massive sell-off of foreign portfolios,” said Evgeny Suvorov, an economist at CentroCreditBank, according to Reuters.
Russian bonds are popular with foreign investors because of the high returns they offer, but the share of foreign portfolios has declined recently due to geopolitical risks. Russian banks are also big buyers.
Meanwhile, the uncertainty about the next moves of the country’s central bank further aggravates the climate. Russia’s central bank is expected to continue raising interest rates this year in a bid to regain control of inflation that has soared to near six-year highs.
Analysts in a Reuters poll expect the central bank to raise its interest rate by 100 basis points to 9.5% on February 11, while some analysts see another increase in March to 10%.
Source: Capital
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