Russia Gets $7.2bn in Latest Borrowing Spree

Russia’s Finance Ministry borrowed more than $7.2 billion so far in March through local-currency and Eurobond sales, almost four times the monthly average in 2018, capitalizing on a recovery in demand among foreign investors, Bloomberg reports.

Оn Friday, Finance Minister Anton Siluanov said that the huge amount raised gives the country room to start trimming sales in the local market.

Russia doesn’t actually need to sell bonds as it is running the widest budget surplus in a decade, but the bumper borrowing now could be a precautionary move against potential U.S. sanctions later in the year, analysts told the news network. A bill under discussion in Congress proposes banning American investors from taking part in sales of Russian sovereign debt to punish Moscow for alleged election interference, among other things.

The ministry is taking full advantage of a surge in appetite for the emerging-market debt this year, and to do it, it abandoned the practice of giving targets before bond sales.

Foreign inflows into Russian bonds have been the main driver behind a roughly 9 percent surge this year in the ruble, the biggest rally among major emerging-market currencies, central bank chief Elvira Nabiullina said on Friday.

Yields on Russian Eurobonds maturing in 2028 dropped below 4.6 percent last week for the first time since July. In March, Russia sold $3.85 billion in Eurobonds, its largest placement since before sanctions were first imposed in 2014.

The Finance Ministry was forced to halt bond sales through the whole of September as borrowing costs surged due to fears that sanctions were imminent. It turned out to be a false alarm.