Russia - bond auction canceled - economy

The Russian Ministry of Finance has canceled the auction of government bonds. There was a lack of bids at an "acceptable" level, the reason given. Originally, a government bond that runs until 2029 and another one that runs until 2036 were to be sold. They should bring around 30 billion rubles (almost 500 million euros) into the state coffers. Last week, the Ministry of Finance tapped the domestic bond market to borrow money for the first time since the attack on Ukraine in February 2022. Because of Western sanctions, Moscow is locked out of the international bond markets. According to Prime Minister Mikhail Mishustin, the Russian state will be in the red until at least 2025. A budget deficit of two percent of gross domestic product is expected for the coming year, Mishustin said on Tuesday. In 2024 it should drop to 1.7 percent and in 2025 to 0.7 percent. The budget gap is mainly covered by taking out loans.

Russian government bonds used to be popular with foreign investors: as of March 1, they held 17.8 percent of the outstanding securities worth 15.61 trillion rubles. Investors from the countries described as "unfriendly" are now effectively stuck on their holdings of Russian stocks and bonds. Russia's largest lenders such as Sberbank and VTB are considered the main buyers of government debt.

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