Because of financial and economic sanctions by the US and allied countries, the cost of insuring Russia’s government debt surged last week to signal a record 99% chance of default within the year after the finance ministry paid some of its dollar bonds with roubles.

“We do not plan to go to the local market or foreign markets this year,” Siluanov told the paper. “It makes no sense because the borrowing cost would be cosmic.”

Todd Schubert, head of fixed income at Bank of Singapore, said Russia’s fiscal position at the onset of the Ukrainian conflict has been favourable thanks to low leverage and sizable foreign exchange reserves. “Given the combination of a strong financial position and their ability to still generate substantial revenues from hydrocarbon sales, this gives the government flexibility to abstain from the public debt markets for the foreseeable future,” he said.

Russia has sold 128 billion roubles ($1,5-billion) in local-currency government bonds, known as OFZ, this year, Finance Ministry data show. Plans had called for 700 billion roubles in sales in the first quarter.

“It is not a question of whether Russia chooses not to issue bonds or not, it is about whether it can or not. Given current circumstances, there is simply no market for any primary issuance,” said Carl Wong, head of fixed income at Avenue Asset Management Ltd. BM