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UPDATE 1-Russia may place Eurobond a week after rate decision on June 16, source says
June 5, 2017 / 3:32 PM / 4 months ago

UPDATE 1-Russia may place Eurobond a week after rate decision on June 16, source says

(Adds details, quotes, background)

By Elena Fabrichnaya

MOSCOW, June 5 (Reuters) - Russia is considering placing a sovereign Eurobond issue a week after a key rate decision scheduled for June 16, a government source familiar with the plans told Reuters on Monday.

Russia’s finance ministry returned to the external debt market last year, raising a total of $3 billion in two tranches. VTB Capital, the investment banking arm of Russia’s second-largest bank, VTB, was arranger.

This year, Moscow intends to issue $3 billion in new debt and swap $4 billion in outstanding Eurobonds for new ones, Finance Minister Anton Siluanov said last week.

The source, who spoke on condition of anonymity, said that U.S. investors have shown interest in the upcoming placement.

As inflation fell to an annual 4.1 percent in April, close to the central bank’s target of 4 percent, the central bank may consider cutting its key rate, central bank Governor Elvira Nabiullina said on Monday.

The Russian central bank will consider cutting the key rate by 25 or 50 basis points at its board meeting on June 16, Nabillina said. It now stands at 9.25 percent, down from 10 percent in autumn of last year.

Nabiullina also said the central bank may raise the oil price forecast in its base forecast after OPEC and non-OPEC oil producers agreed to extend cuts in output into next year.

Yuri Soloviev, first deputy chief executive with VTB, told Reuters that his bank expects the central bank to cut the key rate to 8 percent by the end of this year if the rouble remains strong and to 8.5 percent if the rouble weakens.

“We expect that the central bank’s rate will be cut by 0.25 percentage points in June, then there will be a quite a prolonged pause during the summer and from autumn - a move by 1 percentage point or by 0.5 percentage points,” Soloviev said. (Reporting by Elena Fabrichnaya,; additional reporting by Katya Golubkova,; writing by Vladimir Soldatkin, editing by Larry King)

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