Russia eyes sales of yuan-denominated bonds as local trading in China's currency soars

Russian President Vladimir Putin meets Chinese President Xi Jinping at BRICS Summit in Brasilia
Russian President Vladimir Putin meets Chinese President Xi Jinping at BRICS Summit in Brasilia
Mikhail Svetlov/Getty Images

  • Russia is resuming sales of local bonds after a six-month pause, according to Bloomberg. 
  • Moscow also wants debt backed by Chinese yuan to play a larger role sometime next year. 
  • Yuan-ruble trading volumes have soared as Western sanctions cut of US and European markets.  

Russia is planning to resume local bond sales next month after a six-month pause, according to a report from Bloomberg

Ruble bonds, also referred to as OFZs, could potentially be back on the market in the second half of September, the report says. The Kremlin also wants Chinese yuan-denominated debt to help the recovery of Russian markets. Russia stopped local bond sales in February, two weeks before Moscow invaded Ukraine. 

Meanwhile, the Kremlin is reportedly ramping up plans to debut the yuan locally as trading volumes between the ruble and Chinese currency have grown 40 fold since the start of the year. The debut won't happen until 2023, but both Russia's largest aluminum behemoth and gold miner have already begun transacting in yuan. 

Russia is keen on an agreement that would see China formally back the Kremlin issuing yuan-denominated bonds, although a more likely scenario is using the Chinese currency for local sales in smaller markets to build stockpiles. 

And Russia doesn't need to borrow excessively thanks to exceptional cash infusions from energy sales. The Kremlin is still benefiting from elevated energy prices globally thanks to its invasion of Ukraine. Instead, yuan-debt sales would be intended to introduce companies to the new market in Moscow. 

 

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