DOM.RF Mortgage Bonds to Become the Collateral for Federal Treasury Transactions Performed via NSD’s Platform

09 December 2020
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DOM.RF mortgage bonds (mortgage-backed bonds with additional collateral in the form of a DOM.RF guarantee) will be added to a list of securities used for concluding and settling Federal Treasury repo trades backed by National Settlement Depository’s (NSD’s) collateral management system (CMS).

DOM.RF mortgage bonds are being issued in accordance with Federal Law “On Mortgage-backed Securities” based on the DOM.RF Mortgage Agent’s bond program and to be included to the list of highly liquid assets. Since 2016, 23 issues of DOM.RF mortgage bonds totaling RUB 600 billion have been placed.

The Federal Treasury has become the leader in placing available funds via NSD’s CMS platform, having invested RUB 146 trillion in repos since 2015. Using securities as collateral for repos allows borrowers to mitigate credit risk, and adding DOM.RF mortgage bonds to the list of the Federal Treasury repos collateral will make these transactions more attractive.

“From 2015, repo trades performed via NSD’s CMS have been a popular instrument for placing temporarily available federal budget funds. Transactions backed by collateral allow state lenders to invest funds with minimum risks and optimize profits, and provide credit institutions with access to an attractive liquidity source. Expanding the volume of collateral used for Federal Treasury repos by including bonds issued by DOM.RF, an integrated housing development institution, will open up new opportunities for borrowing banks and will increase the attractiveness of transactions in general,” said Alina Akchurina, Managing Director for Collateral Management Systems Development, NSD.

“Mortgage lending is the most important tool to increase housing affordability in Russia. Securitization is becoming a significant source for financing the mortgage portfolio. The opportunity to attract temporarily available federal budget funds via repos involving DOM.RF mortgage bonds is an important step that increases bonds’ attractiveness for investors. Next year, the amount of DOM.RF mortgage-backed bond issues may exceed RUB 1 trillion; this will be a large and reliable asset class for Federal Treasury repo trades,” said Artyom Fedorko, Deputy CEO, DOM.RF.

DOM.RF mortgage bonds were added to the list of securities involved in Federal Treasury repo trades in accordance with a Resolution of the Government of the Russian Federation “On the Procedure for Performing Transactions to Manage Balances in the Federal Budget Unified Account with Regard to the Purchase (Sale) of Securities Beyond the Organized Trading Platform Based on Repo Agreements and to the Opening of Accounts to Perform Such Trades,” dated 13 October 2020.

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