REUTERS. The Russian Federation that placed Eurobonds in April for the first time in more than a decade will reduce its target for foreign borrowings and could stay away from the debt market in 2011—12, deputy finance ministry Dmitri Pankin said.
During the Eurobond placement the Russian Federation raised $5.5 bln, bids of potential investors exceeded the size of the Eurobond offering by more than 100%, showing how far Russia had gone after the financial meltdown in 1998.
Aside from plugging the budget deficit, the Eurobond placement aimed to improve conditions for foreign borrowings of Russian corporate borrowers. However, investors lost the risk appetite amid the debt crisis in Greece that could spill over to other Eurozone nations, while yields of bonds, including newly placed issues, rallied, which raised relevant costs.
“We jumped into the last carriage of the train, as in a week’s time after our Eurobond placement it became far harder to achieve such results and we see spreads rising," Pankin said in an interview with Reuters Insider television.
“We managed to lower yields by 20—30 basis points. Maybe we expected to attain better results, but the market environment was not that rosy than a week before this.
This year Russia planned to borrow overseas up to $17.8 bln and borrowings could be similar in subsequent years. However, as Russian officials said, this year all new borrowings will be executed on the domestic market. “I guess our main strategy is to borrow domestically, primarily using ruble-denominated instruments," Pankin said specifying the same strategy is applicable to subsequent years.
“Our target is to slash our external borrowings from $20 bln to $7.5 bln…in 2011 and 2012. But this is simply a benchmark of how much Russia could borrow. Right now it’s hard to say whether Russia will borrow or not," he added.
However, Russia’s total borrowings this year will hardly be below the expected Rub 1.5 tln ($50 bln) despite high crude prices.
