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Russia refuses issue of Eurobonds

Россия откажется от выпуска евробондов

Russia will not place Eurobonds in 2016 because of pressure from Western authorities on banks, which could become the organizers of the issue, this writes the Agency Bloomberg with reference to sources.

The official position of the Russian authorities, however, is still different. Literally last weekend, Russian Finance Minister Anton Siluanov said that Russia “does not close the window of opportunity” for the placement.

However, sources at Bloomberg claim that in the current situation it is simply impossible to find large banks to organize the issue, and to ensure adequate demand for these papers will be very difficult.

One source also noted that even participating securities clearing company Euroclear because of pressure from Western authorities becomes a problem, without their participation the issue virtually impossible.

Thus, the Ministry of Finance, apparently, will have to find other ways to cover the budget deficit, which, by the way, this year may be a record since 2010, However, to perform this task quite on forces, all the more so through the issuance of Eurobonds Russia had planned to raise only $3 billion, which would cover less than 10% of the budget deficit. It is important that the Ministry of Finance, in fact, suffered a political defeat.

Now to patch the hole in the budget will be due to the increase of borrowings on the domestic market, as well as through privatization.
By the way, just the other day along these lines appeared fresh comments.

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Evaluation of privatization has increased. Russia expects up to 1.5 trillion rubles of revenues from privatization in 2016-2017, said Finance Minister Anton Siluanov. In January he called the other numbers – 1 trillion rubles.
“From one to one and a half trillion in two years: “Rosneft”, “Bashneft”, “ALROSA” in the first place.

Possible VTB” – said Siluanov at the question of how much the government now expects to receive from privatization in 2016-2017, and for what assets.

Increased and the cost of essential for the country’s privatization package of Rosneft.

The Ministry of Finance in February were planning to get 490 billion rubles to the Federal budget from privatization of the state share of Rosneft in the amount of 19.5%.

As for the placement of OFZ, it is possible here also until everything is stable. Demand from foreign investors in bonds (OFZ) is saved, said the Deputy head of the Ministry of Finance Maxim Oreshkin.

“As for BFL, there we are fine. In 2015, foreigners were the main buyers, now there remains a demand from foreign participants, but is added to it still very active demand from Russian banks,” – he said, reports TASS.

According to Oreshkin, the share of foreign investors in the structure of demand remains “stable”.

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Internal public debt expressed in government securities increased in March to 107.6 billion rubles (+ 1,9%) to 5 trillion 676,4 billion rubles, according to the Ministry of Finance. In January-February debt decreased by 4.3 billion rubles., on January 1 it stood at 5 trillion 573,1 bn

The Deputy head of the Ministry of Finance also noted that the Ministry intends to continue the placement of OFZ linked to inflation. “This segment of the market would be preserved and develop. It is clear that further accommodation will be inflationary bonds, new issues will be”, – he said.
 

Alternative ways

Sources Bloomberg also reported that the government is considering various options to bypass sanctions. For example, the estimated properties of bonds in Swiss francs and Japanese yen, but has been unable to find a sufficient number of participants willing to participate in the placement.

There is also a variant that Russia’s relations with the US and the EU will soon become warmer and in the autumn it will be possible to return to the question of the placement of Eurobonds, however, the experts called such a scenario unlikely.

Indeed, the West has spent too much energy on attempts to isolate Russia, and it is unlikely in the near future we can expect a major improvement in the geopolitical situation.

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