The prospect of President Vladimir Putin staying in the Kremlin until 2036 does not seem to be deterring buyers of Russia‘s high-yielding sovereign bonds as investors focus on economic fundamentals and political stability rather the risk of policy stagnation.
Investors in Russia are no strangers to shocks, having seen the country’s markets roiled in recent years by sanctions and oil price collapses.
Yet very little of this has taken the shine off rouble-denominated government debt – so-called OFZs – thanks to the Russia‘s low indebtedness, prudent monetary and fiscal rules and the world’s fourth largest FX reserves.
Now, constitutional changes that could extend the rule of Putin, who has been in power since 2000, as well as Moscow’s plans to funds its post-pandemic recovery program have shone a fresh spotlight on the $135 billion (£108.05 billion) OFZ market.
Few investors have expressed concern about Putin – who will turn 84 in 2036 – staying in power for so long, though this is not unusual for emerging markets where many prefer the stability of long-standing rulers to the ebb and flow of frequent policy change, as long as fiscal policy is sound.