Yields on Russia’s ruble-denominated debt dropped to a record on speculation a proposal by the Finance Ministry to transfer windfall oil cash to the budget will curb the need to sell new bonds.
The yield on benchmark OFZ bond due February 2027 fell eight basis points, or 0.08 percentage point, to 6.8 percent, by 6 p.m. in Moscow. The ruble advanced 0.7 percent against Bank Rossii’s target basket of dollars and euros to 35.2705 and strengthened 0.9 percent versus the dollar to 30.9760.
The government may channel 367 billion rubles ($12 billion) of extra oil and gas income this year to the state budget to cover a shortfall from state asset sales, Finance Minister Anton Siluanov said April 26. The country’s Reserve Fund may receive a separate 149 billion rubles, he said.
“It’s positive for the OFZ market as it curbs new supply,” BCS Financial Group analysts led by Leonid Ignatiev wrote in an e-mailed note.
The news is also positive for the ruble, as the Finance Ministry may abstain from buying foreign currency for the Reserve Fund on the open market, Alexander Kudrin, head of fixed income research at Sberbank Investment Research, said in an e-mailed note.
Crude rose 0.2 percent in London to $103.38 per barrel. Oil and natural gas contribute about 50 percent of Russia’s budget revenue.