Russia launches yuan bond sale: step toward de-dollarization and new market opportunities

The yuan bond issuance will allow Russia to raise financing outside the dollar system and strengthen ties with China, though investors warn of volatility risks and limited liquidity.

Russia is preparing its first sovereign bond sale denominated in Chinese yuan. The Finance Ministry will start taking orders on December 2, offering two-tranche notes with coupons of 6.25–6.5% for the 3.2-year tranche and up to 7.5% for the 7.5-year tranche.

The bond sale serves several purposes. First, it provides liquidity amid restricted access to dollar and euro markets due to sanctions. Second, it strengthens financial cooperation with China, where Russia has a surplus of yuan amid growing trade and energy flows. Analysts note that setting reference yields for sovereign yuan bonds creates a benchmark for corporate issuance in China, increasing transparency and reducing investor risk. Russian and international companies will be able to access yuan financing more easily, potentially reducing reliance on the dollar.

For international markets, the issuance is significant as it bolsters the yuan’s global financial role and signals a gradual shift toward de-dollarization. This year alone, foreign governments have raised a record 13 billion yuan through similar instruments.

Domestically, the impact may be multifaceted. Russia’s sovereign wealth fund already holds about 57% of its liquid assets in yuan. The new bonds could help redistribute capital, strengthen the banking system, and support exporters with excess Chinese currency.

However, experts caution about risks: limited offshore yuan liquidity, high hedging costs, and potential demand volatility could pose challenges for Moscow. A drop in investor interest could trigger sharp yuan fluctuations, affecting financial stability.

In the long term, the yuan bond issuance opens opportunities for Russia to expand international settlements and invest in China-related projects while reducing vulnerability to Western sanctions.

Irina Zelenenko