The nominal quantity of non-residents’ investments in Russian Federal Loan Bonds (OFZs) as at July 1 was 1.98 trillion rubles, the Central Bank of Russia reported. The total OFZ market at the time amounted to 7.03 trillion rubles. The non-resident investor share has thus dropped to 28.2%, the lowest in nearly one and a half years. The last time this indicator was below 30% was at the end of February 2017. Looking at the nominal volume, the amount invested by non-residents in Russian national debt is at its lowest in one year (at the end of July 2017 it accounted for 1.89 trillion rubles, after which it remained stable above 2 trillion rubles).
The proportion of foreign investors in OFZs and the nominal amount of their investments have been dropping since April. On April 1, non-residents accounted for 34.5% of the market (2.35 trillion rubles), the highest observed since the start of 2012. The situation changed on April 6 when the US placed sanctions on several Russian billionaires, large companies (UC Rusal, En+, Renova), as well as the heads of VTB Bank, Gazprombank and Gazprom. This led to investors fleeing Russian national debt – in three months, foreigners disposed of 369 billion rubles of OFZs, reducing their share of the total by 6.3 points.
In the middle of June, Russian Central Bank head Elvira Nabiullina assessed the effect of foreign investors leaving the Russian OFZ market. “A certain withdrawal of foreign investors from our markets is happening, but it is happening without creating any risks of volatility,” she said. According to her, this trend will continue for some time, but on the whole, Central Bank does not predict a sharp decline in investor interest in Russian assets.