OFZ Auction Results - August 4, 2021. Unsurprisingly Strong Results

For the second week in a row, the Finance Ministry placed more than R50 bln, which represents its approximate weekly borrowing needs. There were again no tangible yield premiums given. In our view, the results open the door for OFZ yields to resume tightening over the next two days.> The 10y OFZ 26239 (July 2031) collected R103 bln in bids, which was the largest demand volume at an OFZ auction since the beginning of June. There was R55.4 bln placed at a weighted-average yield of 7.09%. That implied a moderate 4 bp premium to the same bond in the secondary market and a 17 bp premium to the "off-the-run" curve. There was quite a substantial dispersion across filled bids - the one with the lowest yield was 7.04% and the highest at 7.12%; the largest bid (R11 bln) was filled at 7.06%, basically without any concession to the secondary market. > The 20y OFZ 26238 (May 2041) attracted R42 bln in bids, the highest demand at an auction for this issue so far. The Finance Ministry satisfied almost half of the bids (R19.8 bln). The weighted-average yield was 7.29%, which corresponded to a tiny 1 bp yield premium to the secondary market. The lion's share of the allocation went to just several hands - the five largest bids took up more than half of the placement; however, there were also many small bids, which was likely a sign of active retail participation.