The government's first auction of one-year treasury bonds flopped Wednesday as dealers bought less than a third of the issue, but the Finance Ministry said the results were "normal" for a test auction.


The government sold a mere 60.5 billion rubles ($198.6 million) in one-year bonds at the Moscow Interbank Currency Exchange, or just 30 percent of the 200-billion-ruble issue. Exchange spokesman Vadim Yegorov said that the annualized yield on the bonds was sky-high at 450 percent, compared to about 220 percent for 6-month bills on the secondary market.


The auction appeared to be a setback for the Finance Ministry's treasury bond program, which the government is counting on to help cut its reliance on inflationary Central Bank credits in the 1995 budget.


Marina Chekurova, deputy head of the securities department at the Finance Ministry, said that the ministry was satisfied with the results, though she expressed disappointment at the high yield. Higher yields make it more expensive for the government to finance its budget deficit.


"The results are normal, given that it was a test auction," Chekurova said. "As to the yield, it's certainly too high for us."


The ill-fated bond auction comes as the country's financial markets are still suffering the effects of the ruble's steepest-ever crash earlier this month. The government's last auction of six-month bills was canceled and the Central Bank was forced to intervene heavily at two auctions of three-month bonds.