Russian government bonds to 'attract billions'Mar 22nd, 2012 | By Eleanor Ward | Category: Rouble News
The release of Russian rouble government bonds is expected to attract billions in foreign cash by 2014.
The government is hoping to encourage serious Western institutional investors by conducting an overhaul of the country's domestic bond market.
A significant part of this will be to enable locally-issued treasury bonds – or OFZs – to be issued through international clearing houses. It is hoped that this will remove the regulatory barriers that have discouraged many foreign investors in the past.
By easing the routes to investment, Russia should start to catch up with the levels of foreign participation seen in comparable emerging markets by the end of 2014, according to estimates from Barclays capital.
Christian Keller, emerging Europe research head at Barclays Capital, told Reuters: "The mass of money that can shift is very large.
"You now have an opportunity of a market that has attractive yields, good debt dynamics, and has been under-appreciated."
At the moment, just four per cent of Russia's $90 billion of outstanding OFZs are owned by foreigners, which is significantly lower the rate seen in most other emerging markets.
The move to simplify the process of foreign investment should help to tackle this issue, along with Russian legislation that comes into force in July that will recognise investors as the beneficial owners of government bonds, rather than local custodians.
Werner Gey Van Pittius, from Investec in London, explained to the news agency the changes that this will bring to the market: "All of a sudden there's this market that no one's been involved in: everyone wants to try and grab a piece of the action."