Debt Markets Today - February 4, 2021

CIS EUROBOND MARKETA sharp rise in US Treasury yields put pressure on Russian sovereign Eurobonds yesterday. The issue registering the steepest decline in price was the Russia 47, which lost 1.2 pp, followed by the Russia 42, which shed 1.0 pp.GOVERNMENT DEBTThe Finance Ministry's decision to offer up three issues at yesterday's OFZ auctions caused yields to rise on Tuesday and continue their march upward yesterday. However, the weak demand for the 15y issue at the auction had an even bigger impact on yields. After the ministry managed to place just R9.7 bln in the paper, yields on long-dated OFZs surged 7-9 bps, though they eased back somewhat after the auction for the second nominal issue was canceled to finish the day just 6 7 bps higher. Trading activity was up sharply yesterday, especially in the aforementioned 15y issue, which saw R7.3 bln traded. Total turnover amounted to R34 bln. We believe that the Finance Ministry's test of the market will lead to an appreciable rise in yields, as it took place in the absence of strong domestic or external triggers. We would expect the Finance Ministry to significantly curtail supply moving forward (see the story below).STORIES> Inflation slows in final week of January for technical reasons> OFZ Auction Results: Boosted supply disappoints market> Bi-Weekly FICC Strategy> Ukraine's economic dynamics improve in December and 4Q20