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Local sovereign debt: auctions enjoyed good demand, but secondary market weakened


Yesterday, the Ministry of Finance once again saw plenty of bids at the primary auctions. To recap, the ministry offered two RUONIA-linked issues: RFLB 20 for RUB 10bn and RFLB 25 for RUB 5bn. Total demand for the five-year notes was RUB 31.7bn, and the whole size was allocated at an average rate of 98.82pp. Meanwhile, the 10-year auction was nearly 4.6x times oversubscribed, but MinFin decided to sell only RUB 3.2bn at an average price of 98.84pp. In the meantime, RUB's sluggish performance spooked risk sentiment in the debt market. However, the long end outperformed once again: at the end of the day, mid-term issues lost 0.3pp in price, while the longest notes inched down only 0.1pp. Hence, the curve remained almost unchanged in the long end, but the belly widened 5-7bp.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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