OFZ Weekly Flows - April 26, 2021

A significant outflow of nonresident funds again took place in the OFZ market last week, with R50.8 bln leaving. The outflows did not stop despite a de-escalation in geopolitical tensions, which occurred, however, late in the week and thus may not be reflected in the NSD data. We expect a significant outflow early this week, driven by the CBR's hawkish rhetoric on Friday (see our review). This is the last week before a week-long holiday in Russia, so we do not see a return to inflows despite the improved external background.> NSD data shows R50.8 bln nonresident outflow from OFZs in April 19-23. Outflows were seen across the curve, but the biggest came at the short end (R20.8 bln). Among individual issues, the largest outflow was seen in the 3y OFZ 26227 (July 2024) at R18.2 bln, followed by the 12y OFZ 26221 (March 2033) at R11.2 bln and the 9y OFZ 26228 (April 2030) at R9.8 bln. Meanwhile, several issues in the middle of the curve saw inflows, including the 6y OFZ 26226 (October 2026) at R5 bln, 5y OFZ 26229 (November 2025) at R2.5 bln and 6y OFZ 26232 (October 2027) at R2.0 bln. > Finance Ministry returns to volume limits at OFZ auctions in wake of new US sanctions. Last week, R25 bln was placed between the 7y OFZ 26236 (May 2028) and the 9y floating-rate OFZ 52003 (July 2030). Primary demand for nominal issues among local market participants remains high, and the bid-to-cover ratio exceeded 4 at the nominal auction.> Based on NSD data, share of nonresidents in OFZ market drops 0.4 pp last week to 18.5%. The nonresident share in nominal OFZs dropped 0.6 pp to 28.61%. Against the backdrop of outflows at the end of last week, which should be seen in the Monday-Tuesday data, as well as the currently limited issuance by the Finance Ministry, we think the nonresident share in the whole OFZ market could drop further to 18.2% this week.> According to CBR data, nonresident outflow in March reaches R121 bln, nonresident share falls 1.8 pp to 20.9%. During periods of volatility in the market, it is not uncommon for the statistics of the CBR and NSD to diverge more than usual (recall that the CBR data includes data from other local depositories); however, the data for March was basically in line (according to the NSD, there was a R123 bln nonresident outflow). The CBR data for April (the latest available is through April 23) already shows a R153 bln outflow.