The yield on the 10-year OFZ bond was at the 10.2% level in May, the lowest in three weeks, amid expectations of further interest rate cuts by the central bank and strong demand for the fixed coupon payments from OFZ instruments, while investors monitored the higher likelihood of Russia defaulting on sovereign debt. While its impact in the OFZ market is limited, additional sanctions by the US will prohibit Moscow from paying debt holders through American banks, further increasing the odds of default on Eurobonds to be paid after May 25. Meanwhile, the central bank forecasted the Russian economy to shrink 8-10% during 2022 and could contract up to 3% the following year, before returning to moderate growth during 2024. Also, the CBR expects the key interest rate to range between 12.5-14% this year and retreat to 9-11% in 2023. The bank cut its key rate by 300bps to 14% on its April meeting, more than market expectations.
Historically, the Russia Government Bond 10Y reached an all time high of 19.89 in March of 2022. Russia Government Bond 10Y - data, forecasts, historical chart - was last updated on May of 2022.
The Russia Government Bond 10Y is expected to trade at 10.10 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 10.00 in 12 months time.