The minimal acceptable effective yield appears to be 17%, so a 7% coupon bond has to be deeply discounted to more than double the effective yield.
Essentially what they are doing is selling 1000 Ruble bonds for 500 Rubles, so the coupon yield doubles and then the buyer gets an extra 500 R at term.
I’m not sure if the budget specifies anywhere just how much revenue they expected to receive out of these placements, but right now they’re averaging 65%.
Wow. A 40% discount on bonds is absolutely insane. You're already almost doubling your money just on the principal repayment. I'm surprised the MinFin is letting themselves be gouged this hard by government-owned banks.
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I think Auction Days like this are going to hide how bad things are actually going…and they’re already going bad.
They sold the Constant Coupon Bond PD-26238 for nearly a 50% discount!
So I added a calculation to see what the percentage revenue was YTD.
Essentially what they are doing is selling 1000 Ruble bonds for 500 Rubles, so the coupon yield doubles and then the buyer gets an extra 500 R at term.
But all these discounts hit the expense side of the budget, helping to create the deficit.
Yikes
I’m not sure if I’ll be able to do it for that long, but for now I can…
There going to be a lot of bonds in Q1 that will pay out twice in 2025.