Tightening Western sanctions on already strained Russian bond markets would lead to higher borrowing costs for the government and cause significant volatility in the short term, the country’s deputy finance minister said today.
However, a strong domestic investment base means the market will overcome the barrier of tougher sanctions, Timur Maksimov said in an interview with Reuters.
He noted that the ministry’s plan for issuing bonds this year remains on track.
His remarks come in the wake of a selloff that has pushed yields to a six-year high amid escalating tensions between the West and Russia over Ukraine.
On Tuesday, the finance ministry canceled a bond auction for the second consecutive week as the continued selloff has pushed yields to their highest level since 2016.
Auctions will resume when the market situation “normalizes”, Maksimov said, adding that volatility stems from political developments and not from the economic situation. “This situation cannot remain that way forever,” he said.
“[Οι νέες κυρώσεις] “They will cause volatility in the short term, but they will not really change anything,” he said, noting that 80% of the bonds are held by domestic investors.
The Ministry of Finance plans to raise a total of 3.3 trillion. rubles ($ 41.5 billion) in federal bonds this year, restoring floating-rate bonds combined with fixed-rate bonds.
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