Russia's OFZ Premium Doesn't Signal Change in Debt Strategy, Pankin Says

Russia’s government didn’t signal a change of debt strategy by offering a premium of as much as 9 basis points at yesterday’s auction of 2016 bonds, Deputy Finance Minister Dmitry Pankin said.

The government sold 11.7 billion rubles ($375 million) of federal notes, or OFZs, due August 2016 at an average yield of 7.35 percent after offering 30 billion rubles of the securities. The yield on OFZs rose to 7.37 percent yesterday, the highest since Sept. 30, according to data compiled by Bloomberg.

The Finance Ministry offered investors a return of 7.26 percent to 7.36 percent at the auction, according to a Nov. 16 statement. That amounts to a premium of as much as 9 basis points after the yield rose 1 basis point, or 0.01 percentage point, to 7.27 percent on Nov. 15, Bloomberg data show.

“We think it’s a regular premium,” not the start of a more accommodating approach at OFZ auctions, Pankin said in an interview late yesterday.

Before yesterday’s auction, the government had sold 5.1 billion rubles, or 9.3 percent, of the 54.5 billion rubles it offered at auctions this month.

This year’s government budget deficit may be “slightly less” than the official estimate of 5.3 percent of gross domestic product, Pankin said.

The budget is expected to remain in deficit through 2014, forcing the government to step up borrowing. The world’s biggest energy supplier had a deficit of 5.9 percent last year, its first since 1999.

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net.

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net.