OFZ Weekly Flows - October 18, 2021. Nonresidents Stick to Wait-and-See Approach

Foreign OFZ market flows were again balanced last week, with a net outflow of just R1.7 bln recorded. The breakdown by segment of the yield curve shows the biggest inflow last week having come in medium-dated paper (R6.1 bln), whereas respective outflows of R4.5 bln and R2.7 bln were seen at the long and short ends of the curve. Given the CBR meeting on Friday, we do not expect the position of nonresidents to change significantly this week. Also, investors continue to be concerned about the elevated inflation in Russia, while the global market backdrop remains volatile. Nevertheless, the current prices levels are attracting some sluggish demand to the market. > Nonresident outflow of R1.7 bln seen last week, according to NSD data. The biggest inflow came in the 5y OFZ 26207 (R6.4 bln), 4y OFZ 26234 (R3.9 bln), 10y OFZ 26239 (R3.4 bln) and 8y OFZ 26237 (R3.3 bln). Meanwhile, the largest outflow, came in the 14y OFZ 26233 (-R8.8 bln), 8y OFZ 26224 (-4.2 bln) and the 4y OFZ 26229 (-R3.9 bln).> Full R20.1 bln offered was placed at last week's auction. The success of last week's auction and the Finance Ministry's cautious approach of gradually increasing its offer have been supporting the market (see our OFZ Auction Results note) (continued on the next page). > Nonresident share down 0.1 pp to 20.8% over last week. We think the nonresident share of the OFZ market will remain near current levels this week.> SIFIs remained the main buyers of OFZs in September, according to CBR. Their share of the total amount purchased at auctions climbed 8 pp to 50.8%. The share of nonresidents, meanwhile, climbed 3 pp m-o-m to reach 27.8%. We think these figures point to growing interest in the OFZ market from European investors.