Russia Set to Launch Yuan-Denominated Government Bonds in December

Next month, Russia will issue government bonds for the first time in Chinese yuan, as announced by the Finance Ministry on Wednesday.

The ministry revealed that it plans to offer two series of OFZ bonds, each valued at 10,000 yuan (approximately $1,400), with maturities set between three and seven years and interest payments occurring semi-annually.

Investors will have the option to purchase and receive payments in either yuan or rubles, according to the statement.

The placement of orders is set for December 2, with the actual sale scheduled for December 8.

While the Finance Ministry did not disclose the total volume of yuan-denominated bonds, it noted that this would be determined based on investor interest. A report from Reuters last month indicated that the ministry was preparing to issue bonds worth up to 400 billion rubles ($4.9 billion) in yuan.

The news agency also mentioned that ministry officials had engaged with potential investors and were aiming to attract a diverse group, including banks, asset managers, and retail brokers.

Discussions about issuing bonds in yuan have been ongoing for the past decade, but previous efforts were hindered by Chinese regulatory authorities, as reported by the business news site RBC.

This initiative comes as the Russian government seeks to secure funding amidst a significant decline in revenue. The Finance Ministry now estimates that the budget deficit for this year will reach 5.7 trillion rubles ($63 billion), compared to an initial projection of 1.2 trillion rubles.

As of September, revenue from oil and gas had decreased by 20% year-on-year, and customs duties had fallen by 19%.

Currently, there are about 166 billion rubles ($2 billion) worth of corporate bonds denominated in yuan in circulation within Russia, according to financial data provider Cbonds.