OFZ Weekly Flows - February 7, 2022. Nonresident Outflows Slow

Last week witnessed nonresident outflows of R26 bln from the OFZ market, or almost half of the previous week's outflows. Foreign investors continued to offload their positions despite a recovery in quotes. We expect foreign investor outflows to continue this week (particularly at the short end) ahead of the CBR meeting on Friday, so we expect the nonresident share of the market to drop below 18.3%.> Nonresident outflows reached R26 bln last week. The short end suffered the largest outflows (R20.8 bln), which was unsurprising given the upcoming CBR policy meeting. The belly saw inflows of R2.2 bln, while the long end saw R7.6 bln of outflows. The largest inflows were registered in the OFZ 26232 (R4.2 bln), OFZ 26226 (R3.5 bln) and OFZ 26237 (R3 bln). The largest outflows was seen in the OFZ 26207 (R9.9 bln), OFZ 26225 (R4 bln) and OFZ 26228 (R3.5 bln).> The Finance Ministry returned to the market with a no-limit fixed coupon placement. The OFZ auction held last Wednesday was the most successful since the start of September, in our view. The 7y OFZ 26237 (March 2029) drew bids of R103 bln (the highest level for all OFZ auctions since September). This ministry was therefore able to place R74.7 bln (also a record since September) with no premium to secondary market levels.> The nonresident share in the OFZ market declined by 0.3 pp last week to 18.52%, according to the NSD. Given the resumption of the Finance Ministry's auctions, healthy demand from local accounts and nonresident selling into a recovering market, we expect the nonresident share of the market to retreat again this week to below 18.3%.