OFZ Weekly Flows - November 22, 2021. Flows Mostly Balanced

Last week, nonresidents posted R5.3 bln in outflows from the OFZ market. Selling at the short end of the curve picked up over last week, with R24 bln leaving. The middle and long ends of the curve, meanwhile, saw inflows, which totaled a respective R13 bln and R4 bln. Pressure remains in place due to the ongoing geopolitical tension and still-high level of weekly inflation. Any attempt at recovery faced headwinds from the fact that fixed-coupon paper was placed again last week. With these factors still in play we think pressure will remain in place this week, but we do not think the nonresident share of the market will significantly change, given that most risk-sensitive investors have already curtailed their positions.> Nonresident outflow totals R5.3 bln. The biggest outflow came in the 3y OFZ 26222 (R9.9 bln left) and the 9y OFZ 26235 (R7.1 bln), as well as the 14y OFZ 26233 and 4y OFZ 26229, both of which saw R3.9 bln depart. The biggest inflow, meanwhile, was in the 10y OFZ 26239 (inflow of R12.4 bln), 8y OFZ 26224 (R8.1 bln), 8y OFZ 26228 (R5.7 bln) and 13y OFZ 26225 (R4.4 bln). > Last week's auction placement of R21.3 did not pressure secondary quotes. Demand for the 10y OFZ 26239 (July 2031) totaled R43.5 bln. The entire volume of R20 bln offer was placed at an average weighted yield of 8.27%, which is very close to secondary-market levels. The inflation-linked 11y OFZ 52004 (March 2032) saw practically no interest: only R1.3 bln was placed amid bids for R9.8 bln. The average weighted yield was 3.07%, which is in line with secondary-market levels (see our OFZ Auction Results note from last Wednesday).> Nonresident share of OFZ market held at 20.2% last week, on our estimates based on NSD data. If at this week's auctions the Finance Ministry places a volume in line with the weekly target in order to meet the annual plan, and if the backdrop for the local market stays negative, we think the nonresident share could tick slightly lower to 20.1%.