March 27, 2018 / 3:21 PM / a year ago

Russia mulls Eurobonds in euros, plans to raise $3 billion by year-end

MOSCOW (Reuters) - Russia may tap the global Eurobond market once again this year, aiming to raise $3 billion in papers that could be denominated in euros, the head of the state debt department at the finance ministry said on Tuesday.

People walk in Red Square, with St. Basil's Cathedral seen in the background, in central Moscow, Russia, February 6, 2015. REUTERS/Maxim Zmeyev/File Photo

Russia has already issued Eurobonds this month, trumpeting strong demand despite political turmoil sparked by an attack on a former Russian spy in England and Western financial sanctions that are still in place.

After borrowing $4 billion in mid-March, Russia’s borrowing plan envisages raising another $3 billion by the end of 2018 though the finance ministry has no urgent need to borrow as it is on track to post a budget surplus.

Of the upcoming $3 billion issue, $2.2 billion will be used to fund the budget and $800 million will be used to swap Eurobonds in circulation for new ones, Konstantin Vyshkovsky, who heads the ministry’s state debt department, told reporters.

Vyshkovsky said the ministry may denominate the upcoming Eurobond issue in euros to meet demand from European investors, particularly from Germany, even though issuing such a paper is more complicated than selling a dollar-denominated Eurobond.

“The placement in euros is possible if we see demand for papers in euros in an amount that will allow for issuing a sovereign Eurobond in a benchmark size,” he said.

Vyshkovsky declined to comment on a possible timing of the issue and also did not reveal tenors of the new Eurobonds. He said the finance ministry will issue no more Eurobonds maturing in 2047.

Russia returned to the global Eurobond market in 2016 after two years of absence amid geopolitical tensions with the West that followed Moscow’s move to annex Ukraine’s Crimea region and support it provided to pro-Russian rebels in eastern Ukraine.

Since 2016, demand for Russian debt constantly exceeded the amount on offer, which Russian officials presented as a successfully passed test of global investors’ appetite for Russian assets despite geopolitical instability.

Deputy Finance Minister Sergei Storchak said earlier this month that Russia also considered issuing Eurobonds denominated in Chinese yuan later this year.

Reporting by Darya Korsunskaya and Andrey Ostroukh; Writing by Andrey Ostroukh; Editing by Peter Graff

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