| MOSCOW, March 22
MOSCOW, March 22 Russia will start selling
treasury bonds to households in mid-April, the first time it has
borrowed directly from small retail investors, finance ministry
officials said on Wednesday.
The finance ministry says the rouble-denominated bonds,
known as OFZs for people, will help households to save and
invest, and will be an alternative to keeping money in the bank.
But despite its pledge to ensure timely repayment, demand
could be limited by memories of the Soviet Union's default on
state bonds when it collapsed in 1991 and Russia's own 1998
default and devaluation.
Presenting the new bonds, the head of the state debt
department at the finance ministry, Konstantin Vyshkovsky, said
core purchasers were likely to be people of below average income
and whose knowledge of financial markets is limited.
The minimum purchase size will be 30,000 roubles ($516.82)
and holdings will be limited to a maximum 15 million roubles per
person, Vyshkovsky said. The average monthly salary in Russia
was 36,703 roubles ($632.29) in 2016, official data shows.
Russians will be able to buy the bonds at around 1,400
branches of Sberbank and VTB.
This year, the finance ministry plans to sell up to 30
billion roubles of the three-year bonds, which offer an interest
rate of 8.5 percent with coupons payable every six months.
Income from the bonds will not be taxed and the ministry plans
to issue new bonds every six months.
A brochure for potential purchasers says the bonds will
inspire people to save money, increase financial literacy and
help diversify Russian financial markets.
Deputy finance minister Sergei Storchak said the OFZ bonds
would appeal to citizens because they can rely on the state to
make interest and principal payments.
But the head of the National Agency for Financial Studies,
Guzelia Imaeva, cited a survey by the agency which showed 20
percent of Russians did not trust the state.
"We live in Russia and that says it all," said one
respondent commented, according to Imaeva's presentation at the
OFZ bonds' launch.
The survey also showed that some 55 percent of Russians do
not have any savings and that only 17 percent of those who have
had said they would be interested in buying OFZs for people.
As well as the 1991 and 1998 defaults, Russians experienced
three waves of rouble depreciation in less than 20 years and are
still grappling with a financial crisis that began in 2014 after
Moscow's annexation of Crimea. Licences for many banks have also
been withdrawn since 2013.
In total, the finance ministry plans to borrow 1 trillion
roubles ($17.21 billion) domestically -- of which the OFZs for
people are a tiny fraction -- and up to $7 billion on
international markets in 2017.
Russian treasury bonds are mostly bought by professional
investors and enjoy strong demand thanks to lucrative yields of
more than 8 percent. The central bank's key rate is currently 10
percent, far above annual inflation of less than 5 percent.
($1 = 58.0475 roubles)
(Additional reporting by Elena Orekhova and Polina Nikolskaya;
Editing by Katya Golubkova and Catherine Evans)