Russia is preparing a new yuan-denominated loan following Putin's visit to China
Russia is preparing to take on new debt in Chinese yuan to cover its growing budget deficit, which has already approached 6 trillion rubles. The decision to issue bonds came immediately after Vladimir Putin’s visit to China. The Ministry of Finance plans to enter the market with long-term securities as early as the beginning of June, according to Russian media reports.
The Russian government is preparing for a new phase of borrowing and plans to issue government bonds denominated in Chinese yuan amid a growing budget deficit, which reached nearly 6 trillion rubles in the first months of the year and is forcing the financial sector to seek new sources of liquidity.
The Russian Ministry of Finance announced the collection of bids for a new issue of yuan-denominated OFZs immediately after Vladimir Putin’s return from Beijing, where he was on his latest official visit—his 25th since taking office.
According to reports, applications from investors are scheduled to be accepted until May 28, and the technical placement of the bonds is set to take place on June 3, with the maturity of the new securities set at 10 years, indicating an attempt to attract long-term financing. “The Ministry of Finance has announced the collection of applications for a new issue of yuan-denominated OFZs,” the ministry said in a statement.
This is not the Russian Federation’s first attempt to enter the yuan market: the first two issues of such bonds were placed back in December of last year with maturities in 2029 and 2033, however, the actual sales volume turned out to be lower than expected—instead of the projected hundreds of billions of rubles, approximately 219 billion rubles worth of bonds were sold.
Against this backdrop, Russia’s budget for the current year already includes a deficit of 3.8 trillion rubles, which is planned to be covered primarily by increasing public debt, automatically leading to a further increase in the financial burden on the country’s economy.
The Ministry of Finance’s future plans also include a gradual increase in the debt burden in the coming years—with additional trillions of rubles in borrowing—which indicates the budget’s long-term dependence on debt instruments and external capital markets.
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