OFZ Auction Results - December 15, 2021. Large Redemption Fails to Buoy Demand

Despite today's R350 bln OFZ redemption, the Finance Ministry managed to place just R25 bln total in the two issues on offer - a smaller take-up than a week ago. The results underscore the sluggish demand for medium- and long-duration issues. This is not surprising, however, as downside risks continue to dominate the market, including those stemming from the upcoming trajectory of weekly inflation and the CBR decision on Friday. > The first bond auctioned was the 8y OFZ 26237 (March 2029). Out of the R30 bln offered, R15.7 bln was placed, but without a yield premium. In fact, the weighted-average yield was 8.71%, which was even a couple of basis points below the secondary market. Total bids amounted to R43 bln - the lowest level since mid-October. The structure of bids suggests that demand came from a limited number of participants, as the three largest accepted bids accounted for half of the allocation. The share of non-competitive bids was unusually large at 84%.> At the second auction, the 15y OFZ 26240 (July 2036) attracted R10.8 bln of demand, which marked the lowest level seen for this bond since mid-July. Ultimately, R9.6 bln was tapped, less than half of the R20 bln offer. The weighted-average yield was 8.60%, a 3 bp yield premium to the secondary market. The allocation was distributed in small tickets, with none exceeding R1.1 bln.