The Russian government debt market has come almost entirely under the control of domestic investors. By the beginning of October, the share of non-residents in federal loan bonds had fallen to its lowest level in the past year — just 2.9%. For private investors, this means that OFZ prices are now determined by domestic demand rather than external capital flows.
Foreign investors have effectively stopped buying government bonds, which makes it harder for the state to borrow at low interest rates, and the growing debt servicing costs fall on the budget. At the same time, there is a certain upside for private investors: when there are few buyers, the Finance Ministry has to offer higher yields on new issues.
Non-residents hold less than 3% of government debt
The share of non-residents in OFZs as of October 1, 2026, fell to 2.9%. A month earlier the figure was 3%, and a year earlier — 3.9%, meaning it declined by 1 percentage point over 12 months.
Non-residents held OFZs with a nominal volume of 974 billion rubles as of the beginning of October. The total market volume stood at 34.014 trillion rubles, so for every 100 rubles of government debt, foreigners account for less than 3 rubles.
The decline means that government debt is almost entirely financed by Russian banks, pension funds and private investors. External demand barely smooths out price fluctuations: if domestic buyers start selling securities, there will be no one on the market to replace them.
What is happening in the bond market
The September decline wiped out the August inflow: back then foreigners increased their investments in OFZs by 37 billion rubles, to 1.048 trillion. The non-resident portfolio shrank by roughly 74 billion rubles over September, so it is too early to speak of a sustained reversal.
Against the backdrop of weak external demand, borrowing is becoming more expensive for the state. At two auctions, the Finance Ministry placed OFZ-PD worth 113.1 billion rubles in clean prices at a yield above 16%. This level on fixed-coupon securities was last recorded in May 2025, and long issues are now attracting pension and mutual funds that want to lock in elevated income for the long term.
The Moscow authorities may also come to the market for investors' money: the draft budget for 2027–2029 sets a borrowing limit of up to 300 billion rubles per year. The city has not issued bonds since 2024, and its return will increase supply, which is almost entirely bought up by Russian buyers.
Cryptalist analysis: The near-total isolation of the OFZ market from external capital turns it into a closed system where yields are determined by the balance of domestic liquidity and budget needs rather than by global rates. For institutional investors, this is both a risk of low liquidity during stress sell-offs and an opportunity to lock in yields above 16% on long issues. Further dynamics will depend on the appetite of Russian banks and funds for new placements by the Finance Ministry and Moscow.