Rates Weekly - August 17, 2021. Demand Set to Again be Elevated at Weekly OFZ Auctions

> Ruble liquidity: O/N rates to stay high ahead of tax payments. Last week, a new reserves averaging period started, and demand for liquidity picked up as banks sought, as they usually do, to over-average at the beginning of the new period. Overnight interbank rates gradually rose, yesterday reaching 6.50%, which is quite high. However, over the next five working days liquidity should be boosted by an OFZ redemption, while demand for it should also remain high ahead of R1.1 trln in tax payments next week. Hence, we think that over the next week O/N rates should fall slightly to 6.40%, but not much lower.> OFZs and rates: We expect demand to again be high at this week's OFZ auction. At tomorrow's auction, the Finance Ministry will place the 10y OFZ 26239 (July 2031) and 20y OFZ 26238 (May 2041) without limits, just as we had expected. We think the ministry will be able to again place these issues without a significant premium to the secondary market, and again easily exceed R45 bln in total issuance (the average amount it needs to place per week to meet its annual target), though perhaps not by as much as last week.