OFZ Weekly Flows - June 7, 2021. Modest Nonresident Inflow

The market saw a modest net inflow of R10.8 bln last week, according to National Settlement Depository data. We do not anticipate any significant inflows this week ahead of the CBR's monetary policy decision on Friday. Pressure could come from Russian inflation data due today and US inflation on Thursday.> Nonresident net inflows reached R10.8 bln last week. Similar inflows were seen in the belly (R11.8 bln) and at the long end (R10.5 bln). Flows were more balanced at the front end. Inflation linkers saw the largest outflow, particularly the 9y OFZ 52003 (R9.3 bln).The largest net inflows came in the 9y OFZ 26228 (R12.6 bln) and 4y OFZ 26234 (R8.2 bln), while the largest outflows were seen in the 3y OFZ 26227 (R8.2 bln) and 6y OFZ 26207 (R8.3 bln).> The Finance Ministry placed R53 bln last week. It placed R33 bln in a 4y paper and R20 bln in a 10y issue. In terms of residual volumes among registered nominal issues, only R7 bln remain in the 4y OFZ 26234 and R77.2 bln in the 10y OFZ 26235. Given the very healthy demand for the 10y OFZ 26235 last week (the bid/cover reached 4.1), we think the ministry could look to place the remaining volume before the US sanctions on the primary OFZ market kick in on June 14.> Nonresident share of the OFZ market stays unchanged at around 18.8%. The share for nominal issues stands at 28.9%. We do not expect the share to change significantly this week, as we expect investors to adopt a wait-and-see stance ahead of Friday's CBR meeting and assuming limited supply from the Finance Ministry.