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Local sovereign bonds: Ministry of Finance cancels auctions

 
20.02.2014
In the last two weeks, sovereign bonds have recouped about 70% of their loss from the trough in early February, while RUB was hovering largely unchanged. Thus, once RUB was under pressure again, sovereign local sovereign bonds were hit in line and the yield curve moved 10-20bp wider in the belly and the long end. RFLB 28 is again above 8.50%, closing at 8.54%. The Ministry of Finance cancelled both auctions, saying that market bids did not reflect the good credit quality of the issuer. This was the expected outcome, as in this price action demand for new issuance is quite weak. Overall, the OFZ dynamics will continue to be predominantly driven by RUB dynamics rather than rates story, we think.
Maxim Korovin, Anton Nikitin
VTB Capital analyst

Tags:
bonds, RUB

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