Matter of issuing OFZ in 'friendly' currencies under consideration - Mishustin

MOSCOW. March 28 (Interfax) - The matter of issuing Russian federal loan bonds (OFZ) in "friendly" currencies is under consideration, Prime Minister Mikhail Mishustin said when opening the strategic session on "Ensuring Financial Sovereignty".

"The matter of starting the issuance of federal loan bonds and other instruments in 'friendly' currencies is also under consideration, especially since large Russian issuers have already begun entering the market with borrowings in Chinese yuan," Mishustin said at the session.

The subject of placing government bonds in yuan has appeared on the agenda regularly for more than seven years. The Finance Ministry first announced plans in November 2015 to place about $1 billion in yuan bonds on the Moscow Exchange . Since then, the idea has regularly cropped up in discussions, but these plans have not yet come to fruition.

The Finance Ministry is still thinking of offering OFZ denominated in yuan on the domestic market, but a deal needs a clear understanding of the goals of the potential issue, Deputy Finance Minister Timur Maximov said in September last year.

"We do see that the local yuan market has grown very much. We really have this project in active development. It has had different stages. For the deal to take place, it must make sense for all participants," Maximov said at the time.

Maximov said there were two models for such placement: a deal aimed at Chinese investors, or the placement of yuan bonds for local investors. The first option is fraught with regulatory difficulties, and the second option might make sense if the federal budget finances its foreign exchange operations in yuan, he said.

"The ultimate goal is to do it with panache, to do it right, opening this circuit not only for us, but for the entire market. And the immediate goal is simply to transfer free yuan liquidity to budget accounts, but then we need to decide why we are doing this," he said.