Foreign Investors Flock to Russian Government Bonds

Foreign Investors Flock to Russian Government Bonds

Foreign investors are piling back into Russian bonds, attracted by high yields and the country's relatively strong finances compared with emerging-market peers.

Despite a heavy reliance on oil exports and tense relations with the West, investors say yields on Russian government bonds are attractive given its ability to withstand oil-price volatility. Russia marked its eighth straight week of inflows into its bonds on July 23, according to data from fund tracker EPFR Global, only outdone by China.







"Russia's ruble bonds have extremely high real rates, once you adjust by macroeconomic fundamentals,“ said Joseph Mouawad, a fund manager in the international bonds team at Carmignac. "Russian debt is actually one of our favorite EM debts at the moment.“



Compared with emerging-market peers, Russia has relatively low government debt measured as