Russia is planning to issue $18 billion of dollar-denominated government bonds early next year.
This will be the first government debt issue aimed at international investors since 2000.
It will also be, conveniently, a huge $18 billion short-dollar position.
American Chronicle: “Russia has had its first budget deficit this year since 1999, and it needs to make sure its finances are in order. [Officials] have said they want to issue almost $60 billion in international bonds over the next three years, although they may need to raise much less should the oil price hold up.”
A Russian banker said: “Although Russia still has a lot of foreign exchange reserves, it needs to raise money to improve its infrastructure. It is also the right climate for an international bond.“
The inherent short-dollar exposure gained from selling dollar bonds will effectively be a hedge against an equivalent amount of dollar reserves held by the country’s central bank.
Thus dollar bonds are one way that a country can reduce its long exposure to the U.S. dollar without raising as much attention as a major shift in central bank holdings might.