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. Last Updated: 07/27/2016

aBond Trade May Admit Foreigners

The Russian Central Bank board is likely later this week to discuss allowing nonresidents to trade in treasury bills and government bonds, a Central Bank source said Wednesday.


The next board of directors meeting is due Friday morning.


At present nonresidents are allowed to buy up to 10 percent of each issue, but restrictions on repatriating capital deter foreign participation in the government securities market.


Central Bank and government officials say they plan to encourage foreign investors to buy T-bills and bonds to help bring down the cost of borrowing for the authorities.


The bank is looking at the possibility of installing remote trading terminals in financial centers outside Russia.


The Central Bank's deputy chairman, Andrei Kozlov, said the bank has tested repurchase operations, or repos, in the government securities market in the past few weeks, but does not intend to introduce them regularly soon.


"At the end of last year we tried out different types of repo operations, but such operations will not be conducted immediately, although possibly they will be in the future," he said.


The bank has been building up its armory of Western-style monetary policy instruments, both to steer credit in the economy and to help refinance commercial banks.


Regulations governing the use of repos have been drawn up and will soon be ready for issue, bank sources said.


?The average price of the fifth issue of the federal loan bonds came to 101.5 percent of face value, compared with 94.07 percent at the previous auction, the Moscow Interbank Currency Exchange said Wednesday.


Commercial banks placed 2 trillion rubles worth of bids for a 1 trillion ruble ($214 million) issue. The Finance Ministry actually sold only 356 billion rubles of federal loan bonds, trying to keep yields low, and earned 361 billion rubles, the exchange waid.