Russia is inching closer to its first yuan-denominated sovereign bond sale, aiding China’s push to raise the global standing of its currency.
Russia’s Finance Ministry will start taking orders on December 2 for the two-part, domestically traded notes. The borrower was expected to market the new debt with a targeted coupon of 6.25 to 6.5 per cent for a 3.2-year tranche, the Interfax news agency reported, adding that the coupon for a 7.5-year portion would be capped at 7.5 per cent.
Running a deficit but denied access to dollar and euro funding, Moscow has incentives to raise yuan debt as a surge in its trade surplus with China has left local exporters with a glut of the Chinese currency. The bond sale also marks a step forward in Beijing’s pursuit of a global currency more compatible with its economic and political influence.
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“This move is an important demonstration of localised application of yuan internationalisation and is a key indicator of the evolving global financial landscape,” said Helena Fang, an analyst at China Chengxin International Credit Rating. “From a long-term perspective, Russia’s issuance of yuan sovereign bonds drives a structural shift in the de-dollarisation trend.”
Russia’s idea of selling domestic sovereign debt in yuan dates from 2015, the year after its annexation of Crimea triggered sanctions that locked some local firms out of global capital markets. The war in Ukraine since 2022 has further isolated Moscow internationally, leaving China as one of its few economic and financial lifelines.
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China’s trade deficit with Russia climbed to US$19 billion in the first 10 months of this year, the highest for the period since 2022, Chinese customs figures showed. While Chinese purchases of Russian energy products remained steady, higher tariffs this year caused a slump in auto imports from China.