Local sovereign debt: stronger closing irrelevant
On Friday, Russian local sovereign bonds bounced, with the curve tightening 10bp on the belly and longer end, while front end narrowed 2-5bp. Thus, the OFZ curve bull-flattened near 8bp, we estimate, on the back of a rally on the FX market. RFLB 28 (YTM 8.48%) gained 65bp price wise, RFLB 23s (YTM 8.28%) firmed 50bp in price terms and RFLB 20 6.40 (YTM 8.07%) advanced 35bp in price. However, again, Friday's price action now looks of little relevance: we expect sentiment-driven market participants to start closing their OFZ positions, meaning that the last couple of gains are likely to be surrendered.
Maxim Korovin, Anton Nikitin
VTB Capital analyst
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