The successful launch of euro-denominated bonds by two Russian banks has fuelled hopes that an easing of tensions in Ukraine will allow more Russian companies to access global capital markets.
Sberbank, Russia's largest lender, last week sold €1bn of bonds, testing investor appetite for the first time since President Vladimir Putin's annexation of Crimea. It was quickly followed by Gazprombank, which also raised €1bn.
The deals mean that so far this month, Russia has issued more debt than it did in March, April and May combined.
Total debt issuance fell to only $198m in March as the US imposed sanctions on Russia over its part in the Ukraine crisis, according deals monitored by Dealogic, the data provider. This month it had topped $2.1bn before the Gazprombank deal.
Simon Ollerenshaw, of Barclays, which worked on the Sberbank deal, said it had a very good reception, being more than two times subscribed with more than 200 investors participating.
"There is appetite for Russian issuance, but this will remain subject to the headlines," he said. "The market is monitoring the potential for continued de-escalation in Ukraine – but if the headlines change again, so will sentiment."
Analysts said that while the fact that the first bonds issued since the crisis had been in euros might reflect a political wish to diversify from dependence on the dollar, Russia's longer-term financial needs meant it would have to return to the dollar market eventually.
Sberbank's five and-an-half-year bond was priced to yield 3.35 per cent, less than a similar dollar bond sold before the country annexed Crimea. The five-year Gazprombank bond offered a yield of 4 per cent.
Mr Ollerenshaw said he would not be surprised to see more Russian banks come to the bond market, but did not expect an early flood of issuance from Russian corporates, which seemed to be fairly well funded.
"We went to London, Germany and Switzerland and investors were all telling us that this was the right time for Russia to re-enter the market," said Nick Darrant, head of emerging markets syndicate at BNP Paribas, another bank hired by Sberbank. "Secondary trading for Russian debt has been strong, but new debt issues are the preferred entry point for many investors because they can invest larger sums."
As tensions over Ukraine ebb, the cost of insuring against Russia defaulting on its debt has also fallen back to pre-crisis levels and the country's borrowing costs have returned to levels last seen at the start of the year.
However, Russia has not sold dollar or euro-denominated government debt since the crisis began and bankers say they would not be surprised if the government remained out of global debt markets for the foreseeable future.
The robust price of crude oil, Russia's main export, means the country is under little pressure to borrow money from international investors, said Viktor Szabo, a fund manager at Aberdeen Asset Management, who cut holdings in Russia this year and remains underweight in the country.
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