The 15-Year Bond Yield of Russia Surges to Record High Figure

The 15-year Ruble bonds of Russia have experienced drops, thereby lifting the yield to a record high. The Ruble has also been able to snap the 2-day stretch of decline against the basket of currencies of the Central Bank. The yield on the OFZs which is due by January, 2028, has soared higher by 3 basis points and is currently at 7.39%. This marks its highest value since the bond started trading in this January. On the other hand, the Ruble has gained 0.1% against the Dollar-Euro basket of Bank Rossii and is at 34.9353 now. Against USD, Rubble however has declined by 0.3% and is priced at 30.7775 per USD. When it comes to Euro, Rubble has gone down by 0.5% and is now at 40.0170 per Euro.

In February, 2013, inflation in Russia had increased to 7.3%, if compared to the value of a year earlier. The results were announced by the Federal Statistics Service on 5th March. According to the Economy Ministry of Russia, the same is expected to be within 7.2% and 7.3% in the current month. For this year, consumer prices, incidentally, are expected to decline to 6.5%. The fixed-income strategist of BCS Financial Group, Dmitry Dorofeev, stated that Russian economy is currently through the peak of inflation and a result, the OFZ yields are on a rising note.

The analysts of ING Groep NV, Egor Fedorov and Dmitry Polevoy believe that the low interest in the local market from the foreign investors is a big reason why the yields on the Ruble-denominated Government bonds are increasing further. They added that the interbank lending rates are currently rising and thus, the longer dated OFZs are now less attractive to the local players. Incidentally, the MosPrime overnight lending rate has increased to 6.27% from its earlier value of 6.09% at the end of February.

After increasing by 0.4% on 8th March (The Russian markets were closed on that day), the crude oil in New York, today, has gone down by 0.9%. Each barrel currently costs $91.09. Incidentally, 50% of total budget revenue of Russia is provided by the gas and oil industries of the country.

According to Vladimir Kolychev, the Analyst of OAO Rosbank, if the oil price is stable, that will provide Rubble a short-term basis support, at least on the psychological level.