Russia could sell another Eurobond this year denominated in euros or US dollars, the head of the Finance Ministry's debt department Konstantin Vyshkovsky told in an interview to Bloomberg on May 28.

In March the ministry tested the investor sentiment amid sanction risks and swiftly placed $3bn and €0.75bn worth of Eurobonds. This was the biggest Russian sovereign US dollar issue in six years. Total demand for both issues was high at $12bn. 

The potential new issues would be smaller than the $3.9bn sold in March, Vyshkovsky said. The ministry could also cancel the plans to buy back Eurobonds this year because debt holder demands are too high. This year's budget allows the ministry to buy back up to $4bn of Eurobonds.

The ministry has budgeted $3bn of net external borrowings for 2019 overall and has already beaten the plan. But "the total borrowing programme is still there, its large. We can still place [Eurobonds] to diversify the [financing] sources and given good market conditions," Vishkovsky said previously in March.

The sovereign placement tested the investor mood and amid sanction pressure. In November 2018 Russia placed €1bn worth of seven-year bonds, issuing euro-denominated securities with a five-year maturity, despite the military crisis in the Azov Sea.

"Message from the Russians is sanctions are over....," Tim Ash of Bluebay Asset Management commented on the renewed Eurobond placement plans of the Finance Ministry. "With US sanctions risks fading, the Russians are looking to capitalise by borrowing on international capital markets," he added.

The ministry will also capitalise on growing demand for the OFZ bonds and will expand the proposal range in the domestic federal bonds segment: from offering 20-year OFZs, to introducing floating coupon rate bonds, to allowing the investors who missed the cut-off price at the auctions a second chance to buy. The new mechanisms and issues for the OFZ market would be developed by end-2Q.

As reported by bne IntelliNews, since the beginning of 2019 appetite for OFZs returned, with the ministry holding a number of record-high sales on weekly OFZ auctions. The share of foreign investors in the OFZ market also increased.