Bonds Russian government debt (OFZ) that will be issued in the currency and domestic investors, preserving the capital abroad, took on real form. President Vladimir Putin instructed to define the parameters and terms of issue of such securities, to be place in 2018. Experts have criticized this initiative. Interest on foreign currency OFZ above will be available in Russia coupon payments on government bonds and their repayment will cost a decent amount.
photo: Alex geldings
“You asked to create suitable mechanisms for the return of capital to Russian jurisdiction and as a tool proposed to use domestic bonds foreign loans denominated in foreign currency. The government and the Central Bank this question worked”, — said the head of state at a meeting with representatives of Russian business circles, noting that it is instructed to define the conditions and parameters of the issue of such securities and to provide their appeal next year.
On currency OFZ, which will release the Ministry of Finance for sale to Russian investors, keeping savings abroad, it became known about a month ago. According to Reuters, the proposal was made by the representatives of the business elite. Their capital located in foreign accounts, at the beginning of 2018 can be arrested because another American sanctions. According to foreign publications, the US Treasury will be the new “black list” of our compatriots, which is deemed close to Russian government. The main criterion will be the fact of receiving businessman of the state in an amount not less than $300 million As assistance by the state in such amounts received almost all domestic entrepreneurs, after the tightening of sanctions would have an impact on the lion’s share of our business elite.
According to various estimates, due to the adopted in 2014 the law on the deoffshorization of Russia has left about a third of the 500 richest Russians, which took more than $200 billion If you combine the foreign Bank accounts of Russian oligarchs with liquid securities that they hold abroad, the amount of their assets outside of Russia comes to $1.3 trillion. It is comparable to Russia’s GDP, measured in dollars. These targeted funds and the Ministry of Finance. Its head Anton Siluanov has promised to increase the volume of external loans of the country in 2018 in the event of increased demand for the currency OFZ. When placing Eurobonds priority will be given to Russian investors.
Returning money, the business will not remain without benefit. The bonds that they offer, are likely to have a high yield, and their interest will be higher than in the Russian and foreign deposits. According to Siluanov, domestic investors will provide special tax conditions. They relate to exchange differences, which may be exempt from fiscal duties.
Experts believe that if the parameters of the new OFZ would be similar to those which are in circulation, the coupon will be at the level of 4.5%. In other words, each invested $1 billion will bring the oligarchs profit of $45 million, These rates are considerably above the maximum level of 2%, which gives for deposits in the currency of the Russian banks. And, moreover, higher than in Western financial institutions, which are often negative.
“To cut off the smaller players, the state may have a high nominal bonds, for example, a $10 million”, — says senior analyst “Alpari” the novel Tkachuk.
Received from the sale of OFZ profit, as the expert believes, the Ministry of Finance will continue to accumulate in reserve funds. The influx of “fresh dollars” are also interested in banks that are having problems with currency liquidity.
“A tool like foreign exchange OFZ, it is not advantageous to the state, — said doctor of Economics Igor Nikolaev. — It will increase the national debt and lead to a decline in investment attractiveness of the country. Since bonds are denominated in dollars, the risk of the Russian currency (the most pessimistic government forecasts below 80 virtually any), the government will have to seek additional funds for the calculation of BFL. This will again reveal reserve funds that receive money from the sale of bonds. It is a vicious circle.”
However, the expert believes that the state is in debt to businessmen. “The sanctions are caused by political differences, do not allow entrepreneurs to raise loans from abroad. It is logical that in return of the return of capital they are asking for the best tools for attachments. In fact, in addition to the return of capital, the oligarchs have also confirmed their loyalty to the government ahead of presidential elections”, — considers Nikolaev.