On 16 September Minfin sold two issues of fixed-coupon government bonds. One of them, maturing in 2041, sold at 52.1665% of face value — a figure that can look like the state sold its debt at half price. It did not. The same session sold a 2033 bond at 86.6591% of par, and the cheap-looking long bond cleared at the lower yield of the two.

The coupon helps set the price. The yield shows the return the market demands now. A week ago we wrote that Minfin's auction notices do not print coupons, so we could not say how much of the discount reflected the coupon and how much reflected anything else. The exchange's own security cards provide the answer: nearly all of it reflected the coupon.

What Minfin published

Two notices appeared on the ministry's auction page. Issue 26252RMFS, maturing 12 October 2033, drew 131.767 bn roubles of demand; 116.742 bn was placed for proceeds of 107.085 bn, at a cut-off price of 86.5894% of par and a weighted average yield of 16.30% a year. The cut-off yield was 16.31%.

Issue 26238RMFS, maturing 15 May 2041:

“Results of the placement of issue No. 26238RMFS: — volume of demand – 40.388 bn roubles; — placed volume of the issue – 22.829 bn roubles; — proceeds from the placement – 12.380 bn roubles; — cut-off price – 52.1494% of par; — yield at the cut-off price – 16.00% a year; — weighted average price – 52.1665% of par; — weighted average yield – 16.00% a year.”

Neither auction had an additional placement after it. Together the day drew 172.155 bn of demand, added 139.571 bn of principal to the state's debt and brought in 119.465 bn of cash — 85.6% of nominal. Price times nominal comes to 113.077 bn, which is 81.0%; the 6.388 bn difference is accrued coupon interest the buyers advanced and will get back at the next payment date.

The coupon does the work

The two bonds were issued four years and four months apart, in two different interest-rate environments. The Moscow Exchange publishes a security card for each.

Issue 26238 started trading on 16 June 2021 — before the invasion. Its coupon rate is 7.1%: 35.4 roubles per 1,000 of face value, paid twice a year over 182-day periods, 70.8 roubles a year.

Issue 26252 started trading on 22 October 2025. Its coupon rate is 12.5%: 62.33 roubles twice a year, 124.66 roubles a year on the same 1,000.

Now put them next to what they sold for on the same afternoon:

The bond that sold for half of par carried the lower yield. A bond that pays 7.1% a year when the market wants 16% cannot sell at face value; the buyer has to be compensated through the price instead of the coupon, and with nearly fifteen years left to run that adjustment is enormous. Give the same investor a 12.5% coupon and much less of the return has to come from the price.

So “52% of par” measures a coupon fixed in June 2021, not the market's opinion of Russia in September 2026. The market's opinion is in the other column, and it is 16%.

What it actually cost

That does not make the discount free, nor is it the same thing as a loss. Here is the trade in plain terms.

On the 2041 paper the state received 12.380 bn roubles of cash. In exchange it owes 22.829 bn in May 2041 — 54.2 kopecks of cash per rouble of principal — and, in the meantime, 70.8 roubles a year per 1,000 of face, which on that volume is about 1.62 bn roubles a year for nearly fifteen years. On the 2033 paper it received 107.085 bn and owes 116.742 bn in October 2033, plus about 14.55 bn a year in coupon.

One auction day: 119.465 bn roubles of cash now, against 139.571 bn of principal falling due in 2033 and 2041 and roughly 16.2 bn roubles a year of coupon in between. None of that is hidden — it is what borrowing is — but it is why the number in the borrowing programme and the number the budget can spend are not the same, as we set out last week.

The rate the state is paying

The yields are the number to watch. Both issues cleared above the key rate, which the central bank's own key-rate series puts at 14.00% on 16 and 17 September. The market is charging a premium over the policy rate for long fixed-coupon debt, not a discount to it.

At the previous auctions on 9 September, the 2031 issue cleared at a weighted average yield of 15.45% and the 2039 issue at 15.97%. A week later the 2041 issue is at 16.00% and the 2033 issue at 16.30%. These are different bonds with different maturities, so the comparison is not like-for-like. But no reading of it shows the cost of long borrowing falling. The central bank held the key rate at 14% on 11 September, the level it cut to in July; the yield Minfin pays at the long end has not followed it lower.

What this changes in our model

Nothing, and by design. OFZ placement was retired as an indicator on 22 August, because it measures how the deficit is financed rather than whether Russia can pay for the war. This is a note about a mechanism.

The budget deficit scores 65 out of 100, with the rolling twelve-month deficit at 3.3% of GDP. The strength index stands at 47.3 out of 100, in the stress zone. No indicator moved in today's data update.

What we do not know

Minfin still does not publish the coupon in its auction notices. The coupon rates and the first trading dates above come from the Moscow Exchange's security cards for the two issues, not from the ministry. They are consistent with the prices and yields Minfin printed, but they are a second source and we mark them as one.

The year-to-date total could not be reconfirmed. Minfin's summary workbook of every auction this year is still dated 10 September and returned an error when we requested it today, so the 16 September results are not in any official cumulative figure we could read. The figures above come from the two notices for this day alone.

No fourth-quarter borrowing schedule has been published. Nor has Minfin said what it intends to issue next, which is what would tell a reader whether the mix shifts back towards the shorter, higher-coupon paper that sells closer to par.

We do not say these were the highest yields since any particular date. That claim is circulating in Russian coverage of the auction; verifying it needs the full auction history, which is in the workbook we could not open.