Local sovereign bonds: a fast bounce
On Monday, RUB was not under assault during the MOEX session, so local sovereign bonds bounced, with the long-term yields leading the way. As such, the yield curve narrowed 10-15bp in the belly and the long-end. RFLB Feb-19 closed at 7.84%, RFLB Jan-23 at 8.25% and RFLB 28 at 8.46% (up 1.10pp price wise). At the same time, the curve’s slope at the long-end is near historical lows: for example, the 7s15s spread is below 35bp. Today, the Ministry of Finance is to announce auction details and it is likely that the auction will not be cancelled this time. We believe that primary supply will instead be moved to short tenors, i.e. three- to seven-year bonds.
Maxim Korovin, Anton Nikitin
VTB Capital analyst
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