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Russia Bonds Rise Before 1st Sale Under Euroclear, Ruble Weakens

Feb. 13 (Bloomberg) -- Russia’s ruble-denominated government debt climbed before the government’s first auction of the bonds since foreign access was broadened.

The yield on so-called OFZs due June 2015 fell five basis points to 6 percent, the lowest since Jan. 25, while the yield on March 2014 securities declined three basis points to 5.77 percent by 11.40 a.m. in Moscow. The ruble weakened 0.1 percent against the central bank’s dollar-euro basket to 34.7284.

The Finance Ministry is offering 25 billion rubles ($830 million) of notes due January 2023 at a yield of 6.77 percent to 6.82 percent, it said on its website yesterday. The yield on existing bonds was unchanged today at 6.8 percent. The auction is the first since Euroclear Bank SA, which operates the world’s biggest bond settlement system, started offering direct access to the local market on Feb. 7. Barclays Plc estimates the debt market liberalization may attract as much as $40 billion of foreign inflows in the next two years.

“The OFZ yield will decline rather rapidly” if appetite is strong, Sberbank CIB analysts led by Alexander Kudrin wrote in an e-mailed note today. “In the opposite case a wave of disappointment will move the yield upward,” Sberbank analysts said.

Crude oil, Russia’s main export, was little changed, trading at $97.54 per barrel in New York.

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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