A River of Debt: How Russia's Record 7.2 Trillion Rouble OFZ Year Redrew the Bond Market

Rarely does a debt market end a year on such a paradoxical note: a record-shattering borrowing campaign wrapped up with an auction that barely stirred its audience. In 2025, the Ministry of Finance of Russia placed domestic government bonds — the OFZ family — for a historic 7.2 trillion roubles, roughly 1.7 times the volume of the previous year and the largest sovereign issuance programme the Russian market has ever absorbed. The finale, a pair of low-key fixed-coupon auctions in late December, attracted just 117.9 billion roubles of aggregate demand. The contrast between the year's total and its quiet closing scene captures the story of 2025 better than any single number: the record was built early and decisively, during the months when the Bank of Russia's easing cycle turned fixed-coupon paper into the trade of the year, and by December most of the work was simply done. This deep dive reconstructs how the record was set, who bought it, what it displaced, and what the 2026 borrowing plan — smaller on paper, but dense with redemptions — implies for rates, banks and bond investors, drawing on the year-end market review published by Kommersant daily on December 25, 2025.

A record measured in trillions: the 2025 borrowing campaign in numbers

The headline figure deserves unpacking, because it hides as much structure as it reveals. According to Kommersant's tally, total domestic placements of government bonds reached 7.18 trillion roubles in 2025 — an all-time high and a 1.7-fold increase over 2024. Ruble-denominated OFZ alone accounted for a record 6.98 trillion roubles, some 74% more than the previous maximum set in 2024. On top of that, the Ministry of Finance sold 20 billion Chinese yuan of yuan-denominated sovereign paper, worth approximately 219 billion roubles, marking one of the more visible experiments with non-ruble funding on the domestic market.

The scale of the achievement is best appreciated against the plan. The government's original 2025 borrowing target was raised in November by a full 2 trillion roubles — to 7 trillion — as the deficit financing needs grew. Even that dramatically enlarged target was overfulfilled: the ministry closed the year at 102.7% of the revised plan. In practical terms, the Finance Ministry demonstrated that the domestic market can digest sovereign supply at a pace previously considered impossible without destabilising prices, provided the supply arrives in the instrument investors actually want.

The key parameters of the campaign, as reported by Kommersant:

• total domestic government bond placements in 2025: 7.18 trillion roubles, a historic maximum and 1.7 times the 2024 volume;
• ruble OFZ placements: 6.98 trillion roubles, 74% above the previous record set in 2024;
• yuan-denominated OFZ: 20 billion CNY, equivalent to roughly 219 billion roubles;
• plan fulfilment: 102.7% of the November-revised 7 trillion rouble target;
• fixed-coupon OFZ-PD proceeds (including yuan paper): 5.58 trillion roubles, up almost 3.5 times from 1.6 trillion in 2024;
• floating-rate OFZ-PK: just two issues totalling 1.6 trillion roubles, down from 2.4 trillion in 2024;
• final auction of the year: demand of 117.9 billion roubles across two OFZ-PD auctions, 85.28 billion placed at nominal value, 78.4 billion roubles of proceeds plus about 4.5 billion in tap sales.

The quiet finale: what December's weak auction really said

The last placement of 2025 passed with unusually low investor activity. Aggregate demand at the two fixed-coupon auctions came to 117.9 billion roubles; the ministry placed 85.28 billion roubles at nominal value, collecting 78.4 billion roubles in proceeds and another 4.5 billion or so through supplementary tap offerings after the auctions. Judged in isolation, the numbers look like a stumble. Judged in context, they look like a ministry that had already secured its record and had little reason to press yields higher in the final days of the year.

There is a second reading, too. By late December the easiest money in the duration trade had been made: the Bank of Russia had been cutting its key rate since June, bringing it down to 16% by the end of the year — back to levels of the first half of 2024 — and investors who wanted to lock in double-digit yields on long fixed-coupon paper had largely done so. A year-end auction with modest demand and disciplined pricing is what a saturated, satisfied market looks like. The ministry's willingness to place less than the full demand and accept a muted finale says as much about its confidence in the 2026 calendar as it does about December's appetite.

The great rotation: how fixed coupons displaced floaters

The most consequential structural shift of 2025 was not the volume but the mix. In 2024, the growth of sovereign borrowing had been powered by floating-rate OFZ-PK paper — the instrument that thrives when the key rate is rising or pinned at a peak, because its coupon resets with the benchmark and shields holders from duration risk. In 2025 the logic inverted. The ministry sold only two floater issues for a combined 1.6 trillion roubles, down from 2.4 trillion the year before. Meanwhile, proceeds from fixed-coupon OFZ-PD bonds, including the yuan tranche, surged almost 3.5 times — from 1.6 trillion to 5.58 trillion roubles.

Kommersant is careful to note that this reorientation was driven less by any desire of the Finance Ministry to shrink the floater share of the debt stock than by raw market preference: once the Bank of Russia signalled and then began its easing cycle, investors overwhelmingly wanted fixed coupons. The mechanism is standard bond arithmetic, but its force in 2025 was exceptional.

The duration trade that defined the year

"During a key-rate cutting cycle, fixed-coupon OFZ-PD bonds become more attractive, especially long-dated OFZ. Thanks to their sensitivity to interest rates, their price rises as yields fall, which delivers a higher total return," Aleksei Kornilov, investment strategist at VTB My Investments, explained in the Kommersant review. The total-return point is crucial: a holder of a long fixed-coupon bond in an easing cycle earns the coupon and a capital gain, while a floater holder earns only the (declining) reset coupon. With the key rate on a path from its record peak toward 16% by year-end, and consensus expecting further cuts, the fixed-coupon instrument effectively offered a leveraged bet on the central bank's trajectory.

This is why the November decision to raise the borrowing plan by 2 trillion roubles did not spook the market: the extra supply landed almost entirely in the instrument where demand was deepest. The ministry sold what the market wanted to buy, and the record followed. For the debt market as a whole, 2025 became the year duration risk was repriced from a hazard into an asset — a rotation that reshaped portfolios well beyond sovereign paper.

Who bought the record supply

A 7.2 trillion rouble programme requires buyers with balance sheets to match, and Kommersant's reconstruction of the demand base — built on Bank of Russia data — shows three distinct engines.

The first is the systemically significant banks. From January through November 2025, the largest credit organisations bought 3.4 trillion roubles of OFZ, about a quarter more than in the whole of 2024. At least 2.2 trillion of that went into fixed-coupon bonds. For banks, OFZ serve a double function: a yield asset that appreciated through the easing cycle, and high-quality collateral for repo operations with the central bank. The scale of bank buying also hints at the portfolio reallocation forced upon lenders by weak corporate loan demand in a 16–21% rate environment: when lending slows, sovereign paper absorbs the liquidity.

The second engine is the rest of the banking system. Non-systemically significant banks invested 1.2 trillion roubles in OFZ over the same period. The third is asset management: portfolio managers deployed 1.4 trillion roubles, with investment volumes up two to three times versus 2024 — a direct reflection of retail money flowing into bond mutual funds as deposit rates began to slide and the fixed-coupon narrative took hold. Together, these flows mean the record was not a one-buyer phenomenon: it was absorbed by a broad coalition of banks, managers and, indirectly, households.

The distribution matters for 2026. A debt stock increasingly held by banks at fixed coupons is a debt stock with embedded duration gains that regulators watch closely, and a holder base concentrated in the largest banks shapes how future floater supply — if it returns — will be digested.

The corporate echo: a record year across the whole debt market

Sovereign paper was not alone. Kommersant's companion report on the corporate segment, published in mid-January 2026, found that 2025 was the best year in the history of the Russian debt market as a whole: corporate borrowers raised more than 9 trillion roubles, about 1.5 times the previous record set in 2024, with December alone bringing over 1.2 trillion, as the newspaper detailed in its year-end review of corporate placements. Real-sector companies contributed more than 64% of total issuance, up 12.3 percentage points year on year, while the financial sector's share fell for a second straight year to 21.9% from 32.1%, and development institutions accounted for roughly 14%.

Two parallels with the sovereign market stand out. First, the same rotation away from floaters: the number of corporate issues with variable coupons declined to 192 from 214 in 2024, though the money raised held steady at around 3 trillion roubles — investors, in the words of Natalia Vinogradova of BCS CIB, wanted to lock in high yields before the cutting cycle carried them lower. Second, the same flight to currency-linked structures under tight monetary policy: 97 dollar- and yuan-linked corporate issues worth the equivalent of 1.88 trillion roubles were placed, nearly 2.7 times the 2024 volume, with almost 60% in US dollars — the benchmark currency of the United States — and 38% in yuan, the currency of China. Redemptions rose in step: issuers repaid 8 trillion roubles of bonds in 2025, a quarter more than a year earlier.

Read together, the sovereign and corporate records describe a single market-wide event: an economy cut off from external finance and facing record domestic rates channelled its refinancing needs into the bond market, and investors — anticipating the rate peak — funded it at scale. The debt market became simultaneously the substitute for bank lending and the main vehicle for the duration trade.

The 2026 map: a smaller plan, a heavier redemption wall

The borrowing programme embedded in the adopted 2026 budget calls for 5.5 trillion roubles of new money — 21% less than the 2025 plan. That headline shrinkage, however, understates the workload. Alexander Ermak, chief debt-market analyst at BC Region, calculates that 1.44 trillion roubles of the new borrowing will simply refinance maturing OFZ, 6.1% more than in the current year, with 51% of the redemptions falling on fixed-coupon paper and 42% on floaters. To execute the plan, the ministry will need to place roughly 135 billion roubles a week — about 15% below the 2025 pace.

The instrument mix for 2026 has not been disclosed, but analysts expect fixed-coupon paper to dominate again, because the demand logic that produced the 2025 record has not reversed. "By the end of 2026 we expect the key rate to fall to 12% and the yield on 10-year OFZ to 11–11.5% per annum. As a result, long OFZ will remain one of the core investment ideas for the coming year," says Dmitry Gritskevich, head of banking and financial market analysis at PSB. If that path materialises, holders of the long fixed-coupon bonds issued in 2025 will collect a second year of capital gains on top of coupons locked in at higher yields — the compounding logic that made the duration trade so crowded.

Will floaters come back?

Market participants do not rule out a partial return of OFZ-PK supply, for two reasons. The first is mechanical: two floater issues mature in March and December 2026, together worth 600 billion roubles. Given the likely dominance of banks among their holders, refinancing those holders with new floater paper is the path of least resistance — "taking into account the volume of maturing issues and the likely dominant share of banks among holders, one can assume a certain volume of OFZ-PK placement in 2026 as well," Ermak notes. The second reason is competitive: Alexander Golovtsov, head of analytics at PSB Asset Management, points out that floaters remain a close substitute for deposits — and households alone hold almost 45 trillion roubles on deposit accounts. As deposit rates fall with the key rate, part of that vast pool can migrate into floater instruments that preserve a link to the benchmark. In other words, floaters in 2026 would serve not the duration trade but the savings-defence trade — a different buyer, a different need.

What the record year means for investors, banks and the budget

The 2025 outcome is more than a statistic; it sets the terms on which the Russian debt market enters the easing phase of the cycle. Several practical conclusions follow.

1. Duration crowding is the new risk. With banks holding trillions in fixed-coupon OFZ purchased at peak yields, a stall or reversal in the cutting cycle — say, inflation refusing to converge to the 12% key-rate scenario — would mark those portfolios down and tighten financial conditions through bank balance sheets rather than through lending.
2. The budget bought time at a price. Overfulfilling an enlarged plan means 2025's deficit was funded without emergency measures, but the 2026–2028 redemption schedule inherits the record: heavy maturities in fixed-coupon paper must be refinanced in a market whose appetite depends on the central bank staying on the promised path.
3. Floater supply is an option, not a plan. The 600 billion rouble OFZ-PK maturities and the 45 trillion rouble deposit pool give the Ministry of Finance a natural floater constituency for 2026, but its activation depends on deposit-rate dynamics as much as on the ministry's preferences.
4. The corporate market will compete for the same wallets. With up to 6.75 trillion roubles of corporate refinancing needs estimated for 2026 — 3.9 trillion of maturities plus 5.7 trillion of put options — sovereign and first-tier corporate supply will both chase the fixed-coupon demand that 2025 proved is deep, but not infinite.
5. High-yield is the stress point. Kommersant's corporate review flags that without further rate cuts, the high-yield segment faces slowing borrowing and rising debt-service difficulty — the part of the 2025 boom most exposed if the easing cycle disappoints.

For international observers, the year also illustrated how quickly a market can rewire itself under sanctions-era constraints. Currency-linked issuance in dollars and yuan replaced external borrowing; the bond market replaced the cross-border loan; and the central bank's rate path — not global risk appetite — became the single variable around which trillions of roubles were allocated.

The bottom line

2025 entered the history of the Russian debt market as the year the sovereign borrowed 7.2 trillion roubles, corporations borrowed more than 9 trillion, and the fixed coupon dethroned the floater as the market's instrument of choice. The record was not an accident of aggressive supply but the product of a demand rotation: once the easing cycle began, every major buyer class — systemically significant banks, smaller lenders, asset managers and the households behind them — wanted the same thing, locked-in yields and duration gains, and the Ministry of Finance obligingly sold it in record size. The 2026 plan is formally smaller, yet the redemption wall, the possible return of floaters and the competition from corporate refinancing make the coming year a test of whether the duration trade can unwind in an orderly way. The quiet December auction was, in that sense, a fitting epilogue: the record was set, the rotation was complete, and the market — for a moment — had nothing left to prove.