Rampant Inflation in Russia Is Basis for World-Beating Linkers - Bloomberg Business

Rampant Inflation in Russia Is Basis for World-Beating Linkers - Bloomberg Business:

"While inflation may be the biggest problem for Russia’s central bank, it may also be the key to unlocking a new source of foreign capital: via index-linked bonds.
With the second-fastest rate of consumer-price growth in the developing world, Russian linkers have returned 8.5 percent since they were first offered in July, luring buyers such as the California Public Employees’ Retirement System, or Calpers. Credit Suisse Group AG has touted them as an alternative to regular bonds and they’re about to get included in Barclays Plc indexes starting in February, opening the market to mutual funds that use the gauges to measure their own performance.
Russia sold 30 billion rubles ($465 million) more of the 2023 bonds today in an auction that drew 2.4 times more orders than bonds available, the Finance Ministry said. The notes were offered at 99.41 percent of face value, paying real average interest of 2.72 percent. Appetite will persist even as policy makers try to quell inflation that’s four times the central bank’s target, said Luis Costa, the chief fixed-income strategist for central and eastern Europe, the Middle East and Africa at Citigroup Inc. in London. Russia’s 15.6 percent inflation rate trails only Venezuela in emerging-market economies."



'via Blog this'