Russia Ministry of Finance canceled auction of federal loan bonds sale

The Ministry of Finance refused to hold an auction for the placement of federal loan bonds, which was scheduled for March 4, Forbes reports citing the agency’s website. Ministry officials claim that they came to such a decision due to the unstable situation in the financial markets. With these measures, economists plan to stabilize the debt market.

Last time, the ministry canceled the auction in 2018 due to investor panic after the introduction of new sanctions against Russia. The representatives then explained their decision by the desire to support the debt market.

The past week was the worst for the bond market since the fall of 2018, according to an analytical statement from Gazprombank. The main reason was the fear of investors regarding the spread of COVID-19. The increase in profitability was 20-40 points in the short periods and 45-60 points in the long ones, which indicates the best dynamics compared to other emerging markets. The yield on 10-year bonds fell 5.96%, which means an outflow of foreign investment. Gazprombank analysts say the spread of the coronavirus will continue to affect global markets.

After the auction week this year, the Ministry of Finance has placed government bonds in the amount of 501.3 billion rubles out of the planned 600 billion rubles.

Olga Sterina, head of the debt instruments analysis department at Uralsib, said that the market was not surprised by the Finance Ministry’s decision and practically didn’t react, although an increase in volatility and investor nervousness was expected. Until the end of the quarter, three more auction weeks are planned, during which the Ministry of Finance must attract 100 billion rubles.