VEB Aims to Sell as Much as $967 Million Domestic Ruble Bonds by Year End

VEB, Russia’s state development bank, plans to sell as much as 30 billion rubles ($967 million) on the domestic bond market by the end of this year, Chairman Vladimir Dmitriev said.

The sale is part of the bank’s target to sell as much as 190 billion rubles domestically, he told reporters in Sochi, Russia, today, without giving a timeframe for the sale of the total amount. VEB will wait with selling ruble bonds outside Russia until the government has proceeded with its ruble Eurobond sale, he said.

Russia plans its first oversees sale of as much as $3 billion in ruble debt with maturities of up to five years, Deputy Finance Ministry Dmitry Pankin said on Sept. 8. The move may help reduce borrowing costs on ruble bonds as international investors in search of higher-yielding emerging-market debt snap up the papers. Ruble Eurobonds may yield as much as 25 basis points less than bonds sold domestically, according to Sergey Dergachev, who helps manage $6 billion of emerging-market debt at Union Investments in Frankfurt.

Dmitriev said today the impact of a ruble Eurobond on domestic ruble bond sales “will become clearer after the government sale” of domestic debt abroad.

The ruble Eurobond sale is a “move in exactly the right direction,” Sergey Vasiliev, deputy chairman of VEB, said at a conference on Sept. 9. “It will help the ruble greatly in becoming a global reserve currency.”

The administration of Prime Minister Vladimir Putin plans to introduce laws by November to allow the sale of government ruble-denominated debt abroad, Pankin said this month. There has been no final decision on the timing or parameters of the sale, he said.

To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@bloomberg.net

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