Russia Cancels Bond Auction After Yields Jump on Crimea

Foreign Exchange Rates are Displayed in Moscow
An illuminated sign displays foreign exchange rates for euros and dollars on a street in Moscow. The ruble has weakened 9.4 percent this year, the worst-performing among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso. Photographer: Andrey Rudakov/Bloomberg

March 4 (Bloomberg) -- Russia canceled a bond auction planned for tomorrow after the country’s intervention in Crimea drove bond yields to the highest since 2012 this week.

The Finance Ministry said it pulled the sale due to unfavorable market conditions, according to a statement on its website today. The yield on Russia’s ruble debt due February 2027 surged 52 basis points yesterday to the highest since June 2012. It declined 17 basis points to 8.71 percent as of 3:51 p.m. in Moscow after President Vladimir Putin said there’s no immediate need to send troops to Ukraine.

“At such yields the Finance Ministry doesn’t need the money,” Olga Sterina, an analyst at UralSib Capital in Moscow, said in an e-mailed comment. “The decision is well expected.”

The ruble was the worst-performing currency worldwide yesterday after troops took control of the Crimean peninsula, where Russia keeps its Black Sea fleet, amid escalating tensions in Ukraine. The Finance Ministry axed bond sales ahead of schedule on Jan. 28 and Feb. 4 as appetite for developing-nation assets soured after the Federal Reserve cut monetary stimulus. The ministry canceled debt sales on the day of the auction Feb. 19.

The ruble has weakened 9.1 percent this year, the worst performer among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso. The currency was 1 percent stronger at 36.16 today versus the dollar, paring yesterday’s 1.7 percent slide.

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