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Local sovereign debt: correction; MinFin plans two auctions


Yesterday, the OFZ market came under pressure, starting to surrender positions right from the morning. The announcement of new supply (RUB 5bn in bullet RFLB 28 and RUB 10bn in RUONIA-linked RFLB 25) provided no support to the market, pushing the bonds further into the red. The long end was hit the hardest, losing 0.5-0.7pp by the end of the session. RFLB 28 (YTM 10.86%) lagged the curve, closing 1.3pp lower. The belly was trading 0.4-0.6pp in the red, so the yields widened to 11.1%. The borrowing plan for 2Q15 is 90% done, so the Ministry of Finance will likely continue to place the bonds with no premium to the secondary market. In the meantime, we reiterate that the potentially lower pace of monetary easing makes RUONIA-linked OFZs more interesting than bullet issues.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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