Factors, which Influence Interest Rate on Government Bonds in Russia

Government securities are one of the most reliable debt securities, and the dynamics of their returns is a landmark of general level of interest rates in the economy and is an indicator of risk free rate. It is especially important for investors due to the fact, that yield rate on government bonds reflects the country risk and serves as a benchmark for pricing financial instruments in local currency. The main purpose is to identify factors which affect formation of interest rate on government bonds in Russia for the period 2006-2015. A subject of research is dependence of interest rate for government bonds from a number of factors, selected on the basis of logic and correlation analysis. The analysis identified factors that have a direct impact on the formation of interest rates on government bonds of three yields to maturity - 1, 5 and 15 years. A significant influence on the yield on government bonds in Russia has the money market, in particular, inflation, money supply growth and the exchange rate of national currency. The structural factor - proportion of of non-resident holders in total issuance of government bonds has a significant influence on the formation of the yield on bonds as well as REPO rate. Other factors examined did not have a significant impact on the independent variables.