The Russian Ministry of Finance has announced the issuance of a new tranche of people’s bonds on Wednesday, with a total value of 15 billion rubles or 262.5 million dollars.
The nominal value of the bonds will be one thousand rubles, or 17.35 dollars, maturing on September 16, 2020. The bonds will carry a coupon interest that will be paid at intervals of six months, increasing from seven percent on the first coupon to 10.1 percent on the sixth and final.
Citizens will be able to purchase bonds in a minimum amount of 30,000 up to a maximum of 15 million rubles, and they will be sold by state banks Sberbank and VTB.
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The first tranche of people’s bonds was issued at the end of April, and its total value also amounted to 15 billion rubles.
The government intends to borrow 20 to 30 billion rubles annually with this new instrument, noting in the public debt management plan for the period from 2017 to 2019 that these special debt securities will not be issued solely for budget financing purposes “but actually for the promotion of financial literacy” among citizens and to encourage a culture of saving and investment.
Therefore, at least in the first phase, the potential of this instrument for the government’s borrowing program will be very limited, the document states.
