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MOSCOW, Oct 29 (Reuters) - Russia is considering tapping the Eurobond market with a euro-denominated issue by year-end but the potential sale will depend on the outcome and consequences for Moscow of next week’s U.S. elections, officials said on Thursday.
The U.S. presidential vote has put pressure on Russian market as investors fear that a potential Joe Biden victory over Donald Trump may bring extra sanctions against Russia. The United States has accused Russia of trying to interfere in the 2020 election.
Russia’s plans to raise $3 billion in Eurobonds this year have been first thwarted by the COVID-19 pandemic that fuelled risk aversion and then by increased risks of Western sanctions, prompting Moscow to focus on borrowing at home.
Russia does not rule out issuing a Eurobond this year, Finance Minister Anton Siluanov told an economic forum, adding that this will depend on economic conditions in Russia and abroad.
The U.S. presidential election due on Nov. 3 will impact the potential placement of the bond, said Andrei Solovyov, global head of debt capital markets at VTB Capital.
“I think November looks more attractive than December as investors traditionally start closing their portfolios in December,” Solovyov told Reuters.
“But no doubt it will depend on the situation after the U.S. elections. We can’t forecast how they will end, what decisions and how quickly will be made. These all will affect the potential placement.”
VTB Capital, an investment arm of Russia’s second-largest lender, has acted as sole lead manager for Russian Eurobonds in the past.
Russia, which last tapped the Eurobond market in 2019, is looking for extra sources of funding to make up a budget shortfall caused by lower oil prices and the COVID-19 pandemic.
But a delay in raising the planned $3 billion is unlikely to cause serious financial damage for Russia that raised around $5.5 billion at a single auction by selling rouble-denominated OFZ treasury bonds earlier this week. (Additional reporting by Darya Korsunskaya, Writing by Andrey Ostroukh; editing by Emelia Sithole-Matarise)
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