Ministry of Finance may return to the market short-term government bonds denominated – T-bills, remember the majority of Russian citizens 1998 default. However, when the crisis was at fault not the financial instrument, and its misuse. This time with the help of T-bills is planned not to patch budget holes, but only manage short-term liquidity Ministry of Finance, the amount of securities issued will be small, but very issue – irregular, so that the analogy with the events of 16 years ago is irrelevant, according to the participants.
The following year the Ministry of Finance can begin to place short-term government bonds (GKO). This was yesterday at a meeting of the Budget Committee of the Federation Council said Deputy Finance Minister Tatyana Nesterenko. “Starting this year, we create a repo overnight, placing free budget funds for one night (on the security bumag.- ” b “). And probably will again restore if necessary ICT tools”, – quotes Tass news agency Ms. Nesterenko. According to her, both instruments are interrelated, because “when you have the opportunity to place money on one day, you should still be able to take a very short time.” Assistant Minister of Finance Svetlana Nikitina confirmed “Kommersant” that discussed the possibility of issuing T-bills, so far only in theory.
Despite the fact that the majority of Russian citizens are strongly associated with the ICT 1998 default, this tool is much more rich history. In February 1993, the Supreme Council of Russia approved the draft of the maturity of public debt by issuing short-term government securities denominated in rubles with a maturity of up to one year. May 18, 1993 held its first auction on placement of three-month securities. The auction was unsuccessful: the amount of 1 billion rubles. (Before denomination), banks have acquired securities only 885.4 million rubles., That is, less than $ 1 million (USD exchange rate at the time was about 900 rubles ./$ ). However, a new tool rather quickly gained recognition of financial institutions, especially as bond yields for a long time held more than 100% per annum. At the end of 1995, the volume of GKO-OFZ market was 74 trillion rubles., And in a year – already 241 trillion rubles.
In 1996, the GKO market made foreign investors, albeit with certain restrictions. In particular, derived from repayment of government bonds means that they can withdraw abroad immediately, but with an annual delay. Subsequently, these restrictions were lifted.
After the presidential elections GKO went down to mid-1997 reached 17% per annum. However, the Asian crisis and the fall in oil prices to $ 10 per barrel undermined the already unbalanced Russian budget. Falling revenues were offset by the issuance of debt securities. On 1 January 1998 the total face value of the outstanding T-bills amounted to 272.6 trillion rubles. By this year, the GKO market became the main source of financing the deficit of the Russian budget, which was a fatal mistake.
July 13, 1998 the government offered to owners of GKO convert them into long-term foreign currency liabilities. However, this proposal used the holders of 10% of all T-bills. The rest felt that manage to come up with this market, paying off short-term bonds, the yield of which has already reached 140% per annum. And miscalculated: August 17, the government and the Central Bank defaulted on ruble notes – a three-month moratorium on the payment bank debt to foreign creditors and freeze all payments on GKO and OFZ before the end of 1998. As a result, the state delayed, but still fully repay T-bills only to individuals and a few mutual funds, others received less than 30% of the nominal value of securities.
Otherwise, how “GKO” bond short-term loan then not called. But the country is short lived without this financial instrument. By the end of 1998 were placed two issues of T-bills, and the end of 1999 their issue has once again become a regular. Last T-bills auction was held in February 2004. In the summer of the same year, the Ministry of Finance has reduced domestic borrowing program due to the high level of budget revenues and taking into account the temporary failure of the issue with state. Subsequently placed only long-term bonds (OFZ).
Interviewed experts believe that the emergence of short-term securities of the Ministry of Finance in the current environment in a timely manner. “Restoring the GKO appropriate than tax increases, as it leads to resentment in the business. It is better to resort to borrowing ruble. And their nature, long-term or short-term, it is necessary to determine in the process. This will lead to a variety of tools on the market” – said the chairman of the Supervisory Council of VTB Bank (1998 – Chairman of the Bank of Russia) Sergei Dubinin. According to Mr. Dubinin, with the help of T-bills of exchange placement can effectively regulate the amount of liquidity withdrawing or drawing it. In addition, under conditions of increased volatility this tool benefits both the Ministry of Finance and the Bank, says Head of the Department of stock markets and financial engineering RANHiGS Korischenko Constantine, in 1998, he served as Director of the Department of Open Market Operations of the Central Bank. “It will be a compromise for both the Ministry of Finance, who does not want to raise funds for a long time at high rates, expecting to reduce them, and for banks that want to reduce the risks”, – says Mr. Korischenko.
In addition, it is now clear that the nature of the new T-bills is not the same as in 1998. The year before, the Ministry of Finance to use these tools mainly to cover the budget deficit. In 2015, this tool will only be used “to cover its short-term liquidity needs,” stressed the Ministry of Finance. “The tool is not considered as debt – as a source of budget deficit, it will not replace other types of loans,” – said Svetlana Nikitina, the appearance of T-bills will not affect the plans of the Ministry of Finance OFZ. According to her, placement of T-bills Treasury may need two or three times a year – in the days, which account for a very large one-off payments and for which you want to keep about 600 billion rubles. on the federal budget. “The introduction of such short-term instruments will allow us to reduce the average account balances of the Treasury and to place more money in addition to the financial markets through treasury deposits in repo transactions,” – says Ms. Nikitina.
Surface association with 1998 will not be an obstacle for banks when investing in ICT, experts believe. “I do not think that someone will stop from buying T-bills memories of the year 1998, because the causes of the 1998 crisis were quite different. You do not give up buying a wooden house only because in 1812 there was a fire in Moscow and the whole of Moscow burned? ” – Says Mr. Korischenko.
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