Trade action in the OFZ market was subdued and directionless yesterday. Longer dated bonds saw some bids, with RFLB 28 (YTM 10.26%) settling near 0.2pp higher. In contrast, the belly of the curve traded a bit weaker with quotes marked down 0.1pp. Overall, the curve tightened 2bp in the long end and widened 3bp in yield in the belly and front end. Meanwhile, the auction for RFLB 16 6.0 (YTM 10.00%) left mixed feelings. Total demand was not bad (RUB 2.2bn), yet the
Ministry of Finance decided to allocate only RUB 0.5bn at an average yield of 10.06%. Hence, the Ministry is showing that there is the lack of a need to borrow. Nevertheless, thanks to the auction RFLB 16 6.0 moved down 0.5pp in price, so now it does not look that rich compared with the rest of the curve anymore.
Maxim Korovin, Tatiana Zueva
VTB Capital analysts
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