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Local sovereign debt: strong session


Yesterday morning, OFZs kicked off amid rather solid bids. Hence, by the middle of the day the longest notes were already trading 1.5-1.7pp higher, price-wise, with the RFLB 28 yield down to 11.94%. Later, in the auction, the yield of RFLB 28 printed at 11.77% amid decent demand. The total amount of bids was RUB 27.9bn vs. an offering size of just RUB 5.0bn. However, the rally continued even after the placement of new bonds, so at the end of the day RFLB 28 closed at a yield of 11.62%, having traded up about 3.0pp in price terms.

Meanwhile, the auction for RUONIA-linked notes maturing in 2020 was met with visibly smaller interest. MinFin sold only RUB 4.7bn of new bonds out of RUB 15.0bn offered against RUB 7.2bn of demand. The average price printed at 93.1pp. OFZ yields declined 55-60bp in the long end and 45-50bp on the belly and front end. Hence, the curve flattened back again, with the 2s10s OFZ spread moving down from zero just a couple of days ago to -33bp.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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