17 August 2026
The Russian government debt market, which suffered a precipitous fall in June, has plunged downwards again after a brief respite.
The RGBI federal government bond price index fell for the third consecutive day on Monday, falling to 113.27 points—its lowest in nearly a month. It lost 0.84 points in one day, one of the sharpest intraday declines this year; on Friday, it fell 0.37 points, and on Thursday, 0.79 points.
“The decline of OFZs is accelerating,” Vector Capital analysts note . Yields on long-term bonds, which the Ministry of Finance uses to cover the budget deficit, have again approached 16% per annum—the amount the government will have to pay to borrow for 15 years or more. Rates on bonds maturing after 2028 have stabilized above 15% per annum.
“The key factor here is market fears of another round of the fuel crisis,” Vector Capital writes. Since the beginning of August, four more Russian refineries have halted oil refining due to drone strikes, and at least 10 regions have imposed restrictions on gas stations. Reports of gasoline shortages and queues at gas stations have again begun to emerge from Moscow, where, according to Reuters sources, fuel is being urgently transported from the Urals and Siberia. Kommersant’s sources warn that the fuel shortage could worsen by September, as the Novopolotsk Oil Refinery in Belarus, which supplies the Russian market with a record 200,000 tons of gasoline per month, is undergoing scheduled maintenance.
As the fuel crisis resurfaces, “investors are increasingly doubtful that the Central Bank will be able to continue its cycle of key rate cuts,” explains Alexander Bakhtin, a strategist at Gadra Capital. Supply disruptions and rising gasoline and diesel prices could further increase inflationary pressure and force the Central Bank to take a more cautious stance.
Government bonds are falling along with stocks, notes Finam analyst Dmitry Lozovoy: on Friday, the Moscow Exchange Index experienced its sharpest intraday drop since the September 2022 mobilization, and on Monday, it fell another 2%. Market participants may be pricing in further escalation or more serious financial losses from drone strikes, Lozovoy notes.
OFZs are the preferred method for covering the state budget deficit, and the deficit is chronically growing, notes Andrey Khokhrin, CEO of Ivolga Capital. According to the Ministry of Finance, at the end of July, government revenues were 6.45 trillion rubles short of expenditures. The military budget, instead of the projected 12.9 trillion rubles, could reach 17-18 trillion, and the Ministry of Finance intends to raise at least half of the shortfall through debt.
As a result, “the supply of OFZs should grow, covering the speculative opportunities of buyers,” Khokhrin states.
Anyone stupid enough to invest in mafia land, must have more money than sense. They might as well just burn it.
They should also be burned for investing in this deeply evil shithole.