Russia, hurt by new Biden sanctions, slashes 2021 borrowing plans, to offer OFZ bonds

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Russia, hurt by new Biden sanctions, slashes 2021 borrowing plans, to offer OFZ bonds

In the face of a flurry of new US sanctions mostly aimed at the Russian Central Bank, Moscow had decided against holding on to its 2021 borrowing plans and had been exploring an option to offer only OFZ treasury bonds from June 14, the date after which US lenders would be barred from purchasing Rouble-denominated Russian sovereign bonds according to a new set of sanctions imposed by Biden Administration on Thursday, Russian Finance Ministry said in a statement following the US announcement.

In point of fact, earlier in the day, Biden Administration had inclined a series of malevolent sanctions on Kremlin over accusations of meddling in US 2020 Presidential election alongside a cyberattack on Microsoft that had been leaking a cascade of critical US Government data over a period of nine months last year which Moscow had repeatedly denied.

Russia to trim 2021 borrowing plan after stiffer US sanctions

Apart from that, following the US statement, media outlets had quoted top White House officials as saying that the sanction would involve a ban on US lenders’ purchase of Russia’s Rouble-denominated sovereign bonds from June 14 this year, while as a contingency measure, Moscow had trimmed its 2021 borrowing plans more than anticipated and decided to offer only new OFZ treasury bonds, a coupon-bearing Federal debt-bonds issued by the Russian Government and usually auctioned off by the country’s Ministry of Finance.

Besides, according to a statement issued by the Russ Finance Ministry following reveal of US sanctions, Russian Finance Ministry had agreed to downsize its 2021 borrowing by $11.45 billion from an earlier plan to trim its lending up to $9.20 billion.

Initially, the Russ Finance Ministry had planned to borrow about 3.7 trillion roubles in OFZ bonds in 2021. Meanwhile, commenting on latest US sanctions on Russian Central Bank, Finance Minister Anton Siluanov was quoted saying the new sanctions in effect would hurt US lenders given a soaring demand of Russia’s state-backed sovereign bond.

As of Thursday’s market closure, Kremlin’s 10-year Treasury bond Yields stood at 7.22 per cent. However, the latest US sanctions had sent shockwaves across Russian markets, while Russian rouble faltered as much as 1.5 per cent in midday US trading hours closer to a record low of 77.47 rouble per Dollar.