Russian on Wednesday raised $7 billion in a hugely-oversubscribed bond auction that was its first international offering for almost two years. Russia successfully placed a five- and 10-year bond each worth $2 billion and a 30-year bond worth $3 billion, the Interfax news agency said, quoting market sources. It said that demand for the offer $25 billion.
Pricing is due to take place later Wednesday but Interfax said the yields - the rate of return earned by the buyer - on the bonds were expected to be lower than in its last international offering in April 2010, indicating greater confidence in Russia's creditworthiness. The yield on the 5-year bond placed in April 2010 was 3.741 percent and 5.082 percent on the 10-year bond. For the latest offering, the 5-year yield is set to be considerably lower at 3.335 percent and 4.607 for the 10-year. The 30-year bond will have a yield over 5.826 percent, it predicted.
The April 2010 offering raised a total of $5.5 billion and marked Russia's first use of the international bond markets since the 1998 financial crisis when its economy went into meltdown and the state defaulted on its debt. Russia's budget has suffered none of the debt woes suffered by several EU states as the receipts from energy exports boosted by the high oil price flow into the budget. But the government is also embarking on major expenditure programmes including a massive rearmament drive which is expected to put pressure on the budget in the years to come. As well as borrowing on the bond markets, the government has embarked on a new privatisation plan which it hopes will raise some $60 billion for the state coffers.
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