Foreigners may gain direct access to Russia’s corporate bond market in the second quarter next year once the Finance Ministry clarifies tax and ownership disclosure rules, according to VTB Group, Russia’s second-largest lender.
Russia named a central depositary on Nov. 6, clearing one of the last barriers for foreign investors to buy and sell ruble-denominated debt through international settlement systems. Euroclear Bank SA plans to start servicing government ruble debt by the end of this year or in the first quarter, Stephan Pouyat, head of product management global reach, said at a conference in St. Petersburg earlier this month.
The delay in opening corporate Russian bonds to international investors is due to the lack of clarity on bond coupon taxes and ownership, Nadezhda Ushakova, the head of VTB’s depositary, said in a phone interview today from Moscow.
The Finance Ministry will make clarifications “definitely next year, most likely in the second quarter,” she said. “Once we receive the clarifications, nothing will be preventing us from starting to work with these instruments.”
Removing the coupon tax would make corporate bonds transparent and easier to trade, she said.
“Euroclear expects the Finance Ministry to consider cutting the corporate bond coupon tax to zero. That would be very desirable,” she said.
Russia failed to sell all the debt tendered at its biggest consecutive bond offerings in 18 months at auctions today and last week, as the Treasury sought to take advantage of demand in what may be the last sale before the domestic market opens directly to foreigners.
Local depositaries are currently making final infrastructure changes and goverment ruble bonds will “most likely” open to Euroclear next month, Ushakova said. Euroclear’s press representative didn’t immediately respond to an e-mail from Bloomberg seeking comment.