Russian Eurobonds find little enthusiasm in western debt markets

The Minister of Finance of the Russian Federation, Anton Siluanov, announced the successful placement of Russian Eurobonds in the amount of $1.75 million. According to him, 70 percent of the investment came from abroad although market analysts doubt that is the case.

Moscow has returned to the Eurobond market for the first time after the introduction of the Western sanctions due to Russia's policy towards Ukraine. On Tuesday, May 25th, Russia proposed a ten-year bond for $1.75 million with a coupon of 4.75 percent—relatively high for securities of that type.

The return of Moscow to the Western debt market has not found enthusiasm among foreign investors. However, Russia gathered demand in the amount of approximately $6.3 billion, according to Russian news agencies citing banking sources.

Market analysts dispute Siluanov’s foreign investment claims. Alfa-Bank economist Natalia Orlova was quoted by AFP news as saying “The demand is mainly domestic; foreign investors do not actively participate."

The U.S. State Department issued a reminder that sanctions against Russia are still in force and that American investors should be cautious. "We believe that the risks, both economic and reputational, are related to Russian business," said State Department representative Mark Toner.

Russia announced in February that it had intended to return to the Eurobond market after a seven billion dollar output in 2013. Russia has sent proposals on placement of bonds to 25 Western banks and three Russian banks. However, only the state-owned bank VTB shall place the papers of national debt.

  Russia, Economy of Russia