Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., told CNBC that the five-year notes Russia plans to sell offer more value than U.S. Treasuries of the same maturity.
While Pimco said 10 years ago that it wouldn’t buy Russian debt, the risk is now offset by the reward of the higher yields, Gross said. He still is concerned about the rule of law in Russia, Gross said in the televised interview.
Russia may sell $3 billion of dollar-denominated bonds due in 2042, which may be priced to yield between 250 and 255 basis points more than Treasuries, according to a banker with knowledge of the deal, who declined to be identified because the transaction isn’t public yet. The Finance Ministry is also offering $2 billion of five-year notes at 230 to 235 basis points over Treasuries and $2 billion in 10-year debt at a spread from 240 to 245 basis points, or 2.45 percentage points, the banker said.
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