The Finance Ministry will replenish the budget deficit at the expense of...

The Finance Ministry will replenish the budget deficit at the expense of the yuan

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The Finance Ministry until the end of the year will place the debut issue of Federal loan bonds denominated in the Chinese currency

Photo: TASS/Zuma/Zhengyi Xie

The Ministry of Finance until the end of the first year, plans to place Federal loan bonds in yuan. They will be taken into account over the plan to 200 billion rubles in OFZ, which are provided by budget amendments. Emissions could reach $1 billion About it has informed “news” two sources close to the training placement. Experts note that foreign investors, including from China, are showing great interest in Russian assets. However, the Ministry of Finance expects not only to foreign buyers. The placement of OFZ in the RMB will allow to diversify the portfolio of foreign currency assets and Russian banks.

According to the Treasury, on October 1, was placed debt securities in rubles 733,5 billion (273,6 billion — attracting net) in foreign currency — by 197 billion (110,5 billion net attraction). The recent amendments to the law on budget for 2016 a program of internal borrowings has been extended from 300 billion to 500 billion, from $1.3 billion to $1.47 billion (net attraction). In fact, over the nine months, the Finance Ministry has already fulfilled the annual plan. However, with the deficit higher than planned (3.7% of GDP instead of 3%) faced the problem of increased borrowing.

In the end, the Ministry of Finance is to another placement, and nontraditional — OFZ, nominated in yuan. In principle, such a possibility, the Finance Ministry said since the end of last year, but faced a number of technical and infrastructure problems.

In particular, since the end of September, MinFin reoffered allowed budget limit for the Eurobonds, there was a question about expanding the budget plan, explained in an interview to “Interfax” the Director of the debt Department of the Ministry of Finance Konstantin vyshkovsky. Now the allowed budget limit increased by $170 million Since plans for the floatation of Eurobonds this year, no more, this amount is being laid, according to experts, OFZ bonds in yuan. As explained by the “Izvestia” Konstantin vyshkovsky, the issue in the Chinese currency will be included in the composition of external debt, although it will be released in the format OFZ.

Earlier, the Director of Finance noted that the OFZ in the yuan necessary for the development of the national market.

— Someone considers that it would be easier to place bonds in yuan in the Chinese market — already had experience in a number of countries. But, in our opinion, for the development of the national market it is very important to hold such a position here, in Russia. The main purpose of host — the formation of a new segment of the Russian market, creation for Russian borrowers an alternative source of borrowed funds in new foreign currency — vyshkovsky said in an interview.

Board member, managing Director for cash and derivatives market of the Moscow exchange Igor Maric explained “Izvestia” that today the exchange is actively cooperating with Chinese banks and brokers and noted their interest in access to the Russian market.

The exchange has prepared infrastructure to issue bonds denominated in RMB, last year. Moreover, the majority of the more than 70 listed programmes corporate bonds — multi-currency. Therefore, the potential to issue bonds in RMB can and many Russian companies, he explained.

However, experts still see technical difficulties now.

— The prospects of the project calls into question the rather rigid regulation of capital movement in China, as well as the presence of a very limited number of institutional investors interested in acquiring assets in RMB on the Russian market. China’s state banks are already showing attention to these securities, however, private investors are more pessimistic, said managing partner Kirikov Group Daniil Kirikov.

He pointed out that the problem in this case is that the investors ‘ returns will depend on the dynamics of trade turnover of Russia and China, and this figure in 2015 fell by 28%, and for the first nine months of 2016, growing by only 0.4%.

Russian government securities to investors interesting: in the last location of the yield was even higher than that of the securities of Railways (4.5% against a 3.45 in dollars), reminds the head of operations on the Russian stock market IR “freedom Finance” George Vashchenko. According to him, while the level of debt/GDP is below 20%, and the fed raised its key interest rate, the window of opportunity to borrow is not closed.

Yuan — the third after the dollar and the Euro on turnover of currency on the Moscow exchange. The bonds can be calculated in the first place for investors from South-East Asia, and banks that conduct operations in RMB. It is possible that Chinese agencies will be able to receive a higher investment rating, and due to the fact that the yuan is not yet untethered from the dollar, and in the future will weaken against him, in the end, the loan will be cheaper than in us dollars, does not exclude George Vashchenko.