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Local sovereign debt: 2Q15 borrowing plan 70% done


Yesterday, the Ministry of Finance chalked up another two successful auctions, placing both issues in full (RUB 10bn each). Bullet RFLB 28 was allocated at a 10.56% average yield, spurring yield tightening on the secondary market. Demand for RUONIA-linked RFLB 17 was four times higher than the offer, which allowed MinFin to place the paper at an average price of 99.75pp (+2.0pp to the last auction price in April). Hence, MinFin has already placed RUB 174bn, executing 70% of its borrowing plan for the second quarter. As for the duration breakdown, further issuance would likely be skewed towards shorter instruments, as the borrowing plan in the ‘up to 5 years’ segment is only 57% complete. In the morning, the market was trading 0.3pp in the red, bouncing later in the day after the strong auction results. Hence, the long end gained 10-20bp, while the belly and short-dated issues rose 0.15pp.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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