The Ministry of Finance will advertise public government bonds. Are they worth buying?

The Ministry of Finance has decided to launch a large-scale advertising campaign to promote OFZs among the population on television and social networks; the largest state-owned banks, led by Sberbank and VTB, will help advertise government securities.

What's happened? In mid-May, the Ministry of Finance presented to banks the strategy for the advertising campaign of the people's OFZ, which was prepared by the SPN Communications agency, Vedomosti writes . The goal of the campaign is to attract more buyers of new OFZs, develop the domestic financial market, educate private investors and increase citizens' confidence in government financial policy.

What will happen. In total, from April 2017 to March 2018, the Ministry of Finance placed three issues of public OFZs of 15 billion rubles each, but First Deputy Prime Minister Anton Siluanov complained a year ago that the demand for securities had decreased. The problem is the high entry threshold - 30,000 rubles and bank commissions - 0.5–1.5%.

• The terms of the new issue have been changed: the par value of the bonds has been reduced from 30,000 to 10,000 rubles, and the bank commission has been cancelled. The Ministry of Finance itself will pay the banks for their services.

A large-scale advertising campaign will be launched before placement.

• Agent banks will advertise the new issue of OFZ to people: Sberbank, VTB, Promsvyazbank and Pochta Bank.
• It is also planned to advertise the new issue on television, radio and on the Internet - even separate pages on social networks will be created for the papers.
• 60% of the campaign will be educational content - a description of securities, their advantages, opportunities for investors and step-by-step instructions for beginners.

Money. The campaign budget has not been disclosed, but placement on TV will be free because it is social advertising. It is unknown how much SPN received for its strategy.

What's in it for me?

The Ministry of Finance hopes that the core audience and potential buyers of people's OFZs are men and women aged 35–44 with high incomes. Should they invest in them?

• An inexperienced investor, for whom the securities are designed, will make a choice between OFZ and deposit. And here OFZs win: the maximum rate on deposits in the top 10 banks in terms of the volume of household funds is now 7.4%, the yield on the last placed issue of public OFZs (OFZ-n) is about 8.7%.
• But ordinary OFZs will continue to be more profitable than national ones, the entry threshold is also lower here (only 1000 rubles), Vedomosti reminds . The yield on the government bond index is about 7.4. But simple OFZs, unlike traditional ones, can be purchased from an individual investment account (IIA). Its use gives the right to a tax deduction of 13% of the deposited amount, but not more than 52,000 rubles. When purchasing securities worth no more than 400,000 rubles, their profitability, taking into account deductions, may be 4 percentage points higher than the original one, the publication calculated.

Find out more. You can read more about individual investment accounts and tax benefits for their owners here .