Russia's Government Bond Yields Climb to 16-17% Amid War Spending and Borrowing Strain
Russian government (OFZ) bond yields surged toward 16-17%, with recent auction failures due to unacceptable pricing. The Finance Ministry plans net borrowing of RUB 5T+ this year to cover deficits driven by military spending projected at ~17T rubles next year, representing over 40% of the budget.
TLDR
Rising yields signal mounting costs of war financing despite sanctions isolating foreign buyers. Debt service now consumes 9% of tax revenue, doubling since 2021. Stretched borrowing capacity raises risks of higher taxes, spending cuts, or financial instability if energy prices drop or confidence wanes. Illustrates how sanctions and military spending pressures are straining Russia's fiscal position.
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