MinFin might place one-year federal loan bonds in 2015 - Siluanov
MOSCOW. Nov 27 (Interfax) - Russia's Finance Ministry might place federal loan bonds (OFZ) in 2015 with up to 12-month maturity if necessary, Finance Minister Anton Siluanov told journalists.
"Expanding the line is possible from an urgency standpoint. Next year, in addition to existing security, we will be able to offer the market OFZ with maturity of up to a year if necessary," he said.
Siluanov added that the existing regulatory framework allowed for such securities to be issued that "will be discount bonds, and not the coupon bonds that will be used to cover cash shortages."
"We don't see the need to create principally new instruments with a different regularly framework or name," he said.
Deputy Finance Minister Tatyana Nesterenko previously said that the ministry was considering issuing short-term bonds to fill the lack of liquidity on the unified account of the federal budget if necessary. "If we're going to develop resource allocation instruments then we'll need to have an instrument to attract resources short-term, if the need suddenly arises," she said. This would not be a debt instrument and would not be used to plug the budget deficit. Sometimes you need to re-borrow for two or three days," she said. Siluanov later said that this would concern OFZ with shorter maturity.
Discussing the prospects of issuing long-term bonds, Siluanov said that the size of demand for them on the market would increase as the situation normals on the capital market and interest rates fall.
The Finance Ministry plans to shift the accent in the obligations it issues away from high-cost, longer-term obligations and toward medium-term ones, the head of the ministry's long-term strategic planning department, Maxim Oreshkin, said on Wednesday.
"A situation has taken shape on the financial market in which yields on state paper have risen steeply. We placed 10-year paper today at 10.4%. That is a very high yield. Borrowing for long terms at such rates can hardly be justified by any budget projects or investments. The cost is too high. Clearly, in the current situation we will shift the accent toward medium-term obligations," Oreshkin said on the Rossiya 24 television channel.
The Finance Ministry is unwilling to pay such yields over the entire life of an obligation, Oreshkin said.
As soon as the carry-over effect of the weaker ruble on internal prices runs its course, inflation will slow quite quickly, the Central Bank will start cutting interest rates and yields will head lower, he said.
