OFZ Auction Results - October 20, 2021. Mixed Impression
The Finance Ministry placed the full offer size of R20 bln today without any notable yield premium to secondary quotes during the auction. However, the market had been weak in the morning, and the bid-to-cover ratio was only 2, so it is hard to conclude that the auction was strong. We think demand may have been muted due to uncertainty regarding the CBR's upcoming rate decision and accompanying rhetoric, as well as the challenging global bond market environment. The regulator caught the market off-guard in September by hiking the key rate by less than expected, so it could be that many investors are preferring to stay on the sidelines ahead of this Friday's meeting. > The 10y OFZ 26239 (July 2031) saw R39 bln in total bids, and the full offer was allocated. To put that into context, the past five auctions for the same bond saw average demand of R110 bln. The weighted-average yield was 7.61%, almost on par with the secondary market during the auction, but 4 bps above yesterday's close. The non-competitive share was 35%.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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