Russian finance ministry plans to resume OFZ bond auctions in September

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MOSCOW, July 21 (Reuters) – The Russian finance ministry will resume domestic borrowing through OFZ treasury bonds in September and plans to increase borrowing in 2023 as inflation and the central bank’s key level drop, Interfax quoted deputy finance minister as indicating on Thursday.

Russia suspended borrowing through OFZ bonds, which it works by using to plug spending plan holes, in February amid improved industry volatility weeks ahead of it started off what it calls a “exclusive armed service operation” in Ukraine, triggering sweeping Western sanctions.

Deputy Finance Minister Timur Maksimov reported his ministry was arranging to provide at the first phase a confined total of OFZ bonds, up to 30 billion roubles ($543 million) at a time, but the conclusion will be created following consultations with traders.

“In any circumstance, we will have to begin doing anything this calendar year, for the reason that up coming yr there will be enhanced volumes (of borrowing),” Interfax quoted Maksimov as saying.

OFZ bonds made use of to be well known between international buyers who owned 17.8% of papers in circulation well worth 15.61 trillion roubles as of March 1, times soon after Moscow dispatched hundreds of troops to Ukraine on Feb. 24.

Non-residents from designated “unfriendly nations” that sanctioned Russia are now effectively trapped with their holdings of Russian shares and bonds. Russia’s major loan providers, these types of as Sberbank and VTB, are noticed as the most important consumers of state financial debt.

The Russian government has also authorized investing up to a 50 percent of its wet-day Countrywide Wealth Fund (NWF), which stood at $210.6 billion as of July 1, in OFZ bonds months soon after foreigners stopped getting superior-yielding papers.

“We should in principle commence testing the marketplace in a new natural environment for choices as right after February the sector is split into two segments, essentially left with a nationwide outline. We have to have to have an understanding of how a lot, at what concentrations the sector is completely ready to consider (OFZs),” Interfax quoted Maksimov as indicating.

($1 = 55.2500 roubles)

(Reporting by Reuters Modifying by Jonathan Oatis)

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