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Local sovereign debt: 2Q15 borrowing plan 98% complete


Yesterday, the market kicked off on a stronger footing, trading 10-20bp higher in price in the morning. However, after the announcement of the auction results, the market cooled down a bit, partially surrendering its gains. Thus, RFLB 17s and RFLB 22 7.60 underperformed, slipping 0.15pp in price, while the rest of the curve closed 0.10-0.15pp higher, price-wise. Separately, RFLB 28 inched up to 76.40 (+0.35pp), supported by comments from the Ministry of Finance that, in a high rates environment, long-term OFZ would be placed in limited volumes.

As for the auctions, demand was quite solid, far exceeding the offer. MinFin sold the full amount of RFLB 23 (RUB 7.5bn), but decided to place only RUB 6.2bn of RFLB 20, providing a marginal premium to the secondary market. Hence, the borrowing plan for 2Q15 is 98% complete, and the market is now waiting for guidelines on the next quarter. Given MinFin’s previous statements, the focus is likely to be on floaters, inflation-linkers and mid-term bullet bonds.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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