Local sovereign debt: more pressure
The OFZ curve widened another 20bp yesterday, with the front end underperforming. Price-wise, RFLB 28 (YTM 12.86%) lost 1.00pp, while bonds on the belly surrendered 0.5pp. The Ministry of Finance expectedly cancelled today’s auction. Yesterday, Head of Public Debt Offices Konstantin Vyshkovsky commented on the government's borrowing plans for the next year. He confirmed that MinFin was not ready to borrow for long tenors at current levels, since the Ministry expected some disinflation in future. In returns, the focus would be on the front end and the belly, which is a rational strategy, in our view. He also said that a situation in which bond auctions are cancelled for many weeks in a row was probably wrong. Total local borrowing demand is RUB 800bn, according to him, so MinFin would clearly be more active next week. In addition, he mentioned that at the latest auction, about 85% of demand came from non-residents. Finally, he said that MinFin would initiate legislative changes in order to bring CPI-linked bonds to the market. All of the above has previously been highlighted by MinFin speakers, so is not a surprise.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst
Back to the list