Russia said it may hold its first domestic bond auction with direct settlement through Euroclear Bank SA this month, opening the Treasury market to foreign investors.
“Everyone is pro-actively” working to overcome the last hurdles, Deputy Finance Minister Sergei Storchak said in an interview today in Davos, Switzerland. “One auction in January is quite possible” through Euroclear, he said.
Foreign investors can only trade in Russia’s about 3 trillion-ruble ($99 billion) Treasury market through local brokerage accounts under current rules. Opening the market to systems including Euroclear may bring in between $20 billion and $30 billion this year, according to Goldman Sachs Group Inc.
The Finance Ministry plans to sell 20 billion rubles of 10-year debt and 7.27 billion rubles of seven-year bonds at auction on Jan. 30, according to its preliminary timetable.
Finance Ministry officials had targeted opening the bond market to investors through Euroclear during the second half of 2012.
“Everything is already prepared, but the signals to the market are such that the market is a little bit nervous and would like to see more coordinated action by the authorities,” Storchak said.
Stephan Pouyat, Euroclear’s head of product management global reach in Brussels, said Jan. 9 that his company was seeking confirmation on how Russian law ensures asset protection and settlement finality.
Euroclear is currently in the process of translating a letter from Russia’s Federal Financial Markets Service in response to its inquiries, Martin Gregson, a spokesman for Euroclear in Brussels, said by phone today, without being more specific. He declined to comment on a starting date.
“We view this as a positive signal that things are moving in the right direction,” Esther Law, director of emerging-market strategy at Societe Generale SA in London, said by e-mail.
The ruble gained as much as 0.2 percent against the dollar to 30.16 after Storchak’s comments during evening trading, and was at 30.1800 as of 8:00 p.m. in Moscow. The so-called OFZ market closed at 7 p.m.
“Any kind of uncertainty in the bond market is perceived negatively by investors, but for now, we’re talking about a technical delay of the Euroclear launch rather than about a strategy change,” Vladimir Potapov, who manages about 145 billion rubles as head of portfolio management at VTB Capital Investment Management, said in a phone interview from Moscow.