The issue of OFZ (federal loan bonds) in yuan is planned for the middle of 2016, “provided there is a favorable market situation”, said  Sergey Shvetsov,  First Deputy Governor of the Bank of Russia, speaking to journalists at the Moscow Exchange Forum.

“We are working on this issue together with the Ministry of Finance in order to prepare an infrastructure and establish a benchmark, and this will be followed by bank bonds and bonds of Russian companies. We hope that building up relationships with investors from Asia will ensure demand for these instruments and that this market will be quite large. It may take five years for it to become independent on the Russian debt market,” stressed Mr. Shvetsov.

He also noted that Russia was most interested in attracting investors from Mainland China: “For this market to become truly liquid, it must become accessible for local investors from China. The First Deputy Governor of the Bank of Russia informed the media that the central depositories of Russia and China were negotiating the process of “building a depository-clearing bridge that would allow mainland China investors to hold these bonds in local depositories without having to open accounts abroad”.

Mr. Shvetsov stated that the project would be completed within 9-12 months.

 Former Russian Minister of Finance Alexei Kudrin pointed out in his reply to TASS that the future issuers of yuan bonds on the Moscow Exchange would have to meet quite strict criteria. “At the first phase these will be blue chips, because China will also be monitoring and influencing this process,“ said Mr. Kudrin. “In the future, when everyone learns to understand and assess risks, this will also become possible for more simple issuers and not only for those with the highest ratings.”

 Source: TASS