SOCHI: Russia's Finance Ministry could afford to borrow 200 billion roubles ($6.19 billion) less than initially planned from domestic debt markets this year, the ministry said on Friday, broadly in line with current market expectations.
Demand for local-currency emerging market debt has been subdued recently due to expectations of tighter monetary policy from the US Federal Reserve.
Russia's finance ministry will auction up to 340 billion roubles ($10.52 billion) in OFZ treasury bonds in the fourth quarter, focusing on issues with maturity of five to 10 years.
Russia missed its third-quarter funding target for treasury bonds, placing around 177 billion roubles ($5.52 billion) out of the 270 billion roubles planned between July to September.
It has placed 529 billion roubles in treasury bonds so far this year out of the 753 billion roubles on offer.
But with one of the lowest debt burdens among major world economies and a budget deficit envisaged at 0.7 percent this year, it is under little pressure to ensure it meets its initial target for domestic borrowing this year of 1.2 trillion roubles.
"There is a risk of not borrowing (200 billion roubles). We have a chance to borrow, but at a high yield. That is why we would prefer to use oil revenues, rather than raising rates on the market," Russia's Finance Minister Anton Siluanov told journalists.
The country ran a budget surplus during the first eight months of the year thanks to high commodity prices and sovereign debt at around 11 percent of gross domestic product, compared to Greece's more than 160 percent or Japan's 200 percent.
Siluanov told the Reuters Russia Summit this week that the ratio would edge up to 13 percent in 2014.
"The debt policy will not change significantly. We are not blowing up the budget deficit and we are not going to tap more resources from the market, thus affecting rates in the economy," Siluanov told the Reuters summit.
The market has already priced in the idea that the Finance Ministry will not seek to meet the borrowing plan for this year, said Dmitry Polevoy, economist at bank ING.
"Oil and gas revenues exceeded the plan and the ministry will transfer only a few dozen billion to the Reserve Fund, so the budget will not suffer from lesser borrowing".
Comments
Comments are closed for this article.