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Local sovereign debt: long end is back at 14.0%

Yesterday, OFZs continued on a stronger footing. At the end of the day, the whole curve tightened 70-75bp on the belly and long end. In particular, RFLB 28 (YTM 14.20%) gained 2.5pp in price, while RFLB 27 (YTM 14.09%) surged almost 3.0pp in price terms. On the belly of the curve, prices moved up 1.5pp. We continue to think that the long end of the OFZ curve looks interesting, since new supply risks here are rather low, while expecting marked disinflation in the second half of the year. Finally, on a DV01 basis, the long end gives opportunity to limit FX exposure compared with the bonds on the belly, which offer about a 1.5% yield pick-up compared with the long end.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst


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