Russia Long Bonds Climb 1st Time in 2 Weeks as Auction Sells Out

Russia’s ruble bonds due 2027 rose for the first time in more than two weeks as oil climbed and the Finance Ministry sold all of the local debt it offered at an auction.

The yield on OFZ bonds due February 2027 declined seven basis points, or 0.07 percentage point, to 7.43 percent. The ruble strengthened 0.1 percent against Bank Rossii’s basket to 34.9704 by 7 p.m. in Moscow. The currency gained 0.4 percent versus the dollar to 30.8715 and lost 0.1 percent to 39.9820 against the euro.

The Finance Ministry sold its entire offering today of 6.22 billion rubles ($201 million) of bonds due 2019 at a 6.55 percent average yield, according to a statement on the Finance Ministry’s website. Total demand at the top end of the yield range was 22.7 billion rubles. Crude oil, Russia’s main export earner, climbed 0.5 percent to $107.98 a barrel in London.

“It’s a small correction from a long decline,” Alexander Nikonov, head of fixed income at Regional Broker Co., said by e-mail.

The Ministry canceled a planned auction of 20 billion rubles of 15-year bonds yesterday, citing “market conditions.” The yield on the 2027 bond has increased 59 basis points from a record low of 6.84 percent on Jan. 10.

Russian companies transfer about 200 billion rubles of value-added tax to the state budget today, according to HSBC Holdings Plc calculations published in a note dated March 4. Russia’s Finance Minister is meeting his Cypriot counterpart for loan talks in Moscow today.

Borrowing Schedule

The publication of the Finance Ministry’s borrowing schedule for the second quarter, the key event for the local debt market, is expected at the end of next week, Sberbank CIB analysts led by Alexander Kudrin said in a note to clients.

“We don’t expect any more notable market strengthening,” Sberbank CIB said.

Russian lenders and companies had about $31 billion placed in Cypriot banks or their own units at the end of 2012, according to a report from Moody’s Investors Service March 13. The remaining $29 billion in exposure comes in Russian bank loans to Cypriot companies of Russian origin, the ratings company said.

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