OFZ Auction Results - April 22, 2021

Yesterday, the Finance Ministry placed around R25 bln in OFZs amid still-strong demand for nominal paper. Barring a fresh deterioration in the external backdrop, the good demand for OFZs in the primary market may provide support to secondary market quotes. It is entirely possible that the Finance Ministry will employ limits at the auctions for the rest of the year. Following yesterday's placement and in light of the reduction in the borrowing plan, the Finance Ministry will only need to place R45 bln per week for the rest of the year in order to meet the plan.> The Finance Ministry placed the full R20 bln offered in the 7y nominal OFZ 26236 (May 2028) with a premium to the secondary market of 2 bps. Of this, R16 bln went to a single bidder, meaning a single buyer again snapped up most of the nominal paper on offer. The placement was at one price, so we cannot judge how many non-competitive bids were filled. > Of the R10.3 bln offered in the inflation-linked OFZ 52003 (July 2030), only R4.8 bln was placed, seemingly without a premium. Demand for inflation-linked paper remained weak despite currently high inflation. This is because the traditional buyers of this paper - pension funds and foreigners - have not been particularly active recently.