Russia plans to sell $7 billion of bonds in three maturities as soaring oil prices boost confidence in the world’s biggest energy exporter.
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 U.S. 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.
The nation’s main export oil blend has jumped 16 percent this year, pushing the yield on Russia’s existing 2030 dollar bonds to within two basis points of a record low on March 9. Russia, which achieved a budget surplus of 0.8 percent of gross domestic product last year, registered to sell as much as $7 billion of securities in its first offering of dollar bonds since April.
“I expect the demand to be strong,” Morten Groth, who helps oversee $1.7 billion of debt at Jyske Bank A/S (JYSK) in Sikeborg, Denmark, said by e-mail. “The first price guidance looks quite okay, but it’s also a decent amount, $5 billion to $7 billion as far as I have been told.”
Yields on 30-year U.S. Treasuries at 3.313 percent today would put Russia’s rate at 5.81 to 5.86 percent, data compiled by Bloomberg show. When Russia last issued 30-year bonds in 2000, the government paid interest at 7.5 percent. It paid 12.75 percent for 30-year bonds sold in 1998.
The 2030 dollar bonds yielded 4.17 percent today, or 83 basis points over U.S. Treasuries.
The average spread for Russian dollar-denominated bonds rose three basis points to 275 basis points today, according to JPMorgan Chase & Co.’s EMBI Global Index.
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