In July, the share of Russian federal bond holders who are foreign investors drifted down by 0.9 percentage points, landing at 7.9% as of August 1, 2023. The Central Bank of the Russian Federation provides the underlying data, noting that non-residents held a nominally sizable 1.556 trillion rubles in OFZs. This shift reflects ongoing changes in international demand for Russia’s debt instruments and suggests a rebalancing of the investor base amid evolving macro conditions.
Earlier, on July 1, the foreign ownership share stood at 8.8%, with the nominal volume of OFZs held by non-residents reaching 1.69 trillion rubles. These figures illustrate a pattern where foreign participation fluctuates with fluctuations in risk appetite, interest-rate expectations, and Russia-related policy developments. Market watchers in North America and Europe often track these dynamics to gauge how external capital responds to domestic fiscal settings and global yield trends.
Looking back, the late-2021 period saw a much larger foreign footprint. At the end of 2021, roughly one in five OFZ holders was foreign, amounting to about 19.9%. Back then, the total investment in Russian bonds climbed to about 3.1 trillion rubles, a level that highlighted strong foreign demand during a period of relatively favorable conditions for OFZs. In the third quarter of 2021, non-residents invested a record 3.4 trillion rubles in OFZs, underscoring how foreign appetite can surge when external financing terms align with local issuance needs. Over eight months, foreign ownership fell by a factor of about 2.5, while the aggregate investment more than doubled, signaling a significant reshaping of the investor mix during that stretch.
The foreign share of OFZ holdings has trended downward since October 2022. On October 1 of the previous year, non-residents accounted for 17.9% of holdings; November 1 showed 17.6%, and December 1 registered 13.2%. By January 1, 2023, that share stood at 11.1%. The trajectory continued with 9.9% at the start of February and 9.1% as of June 1, signaling a continued retreat of non-residents from these Russian fixed-income instruments amid shifting global risk sentiment and capital flows. Analysts in Canada and the United States monitor these shifts to understand how foreign exposure evolves and what it might mean for yields, liquidity, and market confidence in OFZs over time.
Industry observers, including Natalia Vashchelyuk, who previously served as Chief Analyst at Sovcombank, note that OFZs can be a viable savings option for longer horizons. The assessment points to OFZs as a potential repository for capital over periods exceeding six months, with attention to interest compounding, currency considerations, and the relative stability of Russian debt issuance against broader market volatility. In practical terms, investors weigh yield against risk, currency exposure, and the potential for policy shifts that could affect the bond stream and its price trajectory. These considerations are part of a broader dialogue about portfolio diversification, risk management, and the role of sovereign bonds in a diversified domestic and cross-border investment strategy, particularly for Canadian and U.S. investors evaluating opportunities in emerging markets.