Rates Weekly - August 24, 2021. Finance Ministry Continues No-Limit Auctions; We Advise Paying 3m FX Swap Rate

> Ruble liquidity: O/N rates set to stabilize following brief spike amid tax payments. Demand for liquidity has been fairly high over the past week, with banks hoarding funds ahead of R1.4 trln in tax payments due this week. O/N rates have been trading quite high at 6.40-6.45%. Nevertheless, we could see a modest liquidity shortage tomorrow when the major tax payments fall due, and O/N rates could climb above the key rate to around 6.7%. However, Thursday will see a liquidity inflow due to Federal Treasury operations, which should partially offset the tax-related outflows. So we expect the liquidity situation to become comfortable again on Thursday and O/N rates to ease to 6.4%, stabilizing around that level on Friday and early next week.> OFZs and rates: Finance Ministry continues no-limit auctions; we advise paying 3m FX swap rate. Tomorrow, another set of no-limit auctions will be held - the fifth in a row. The Finance Ministry continues cycling through the four issues that it has at its disposal, so it is unsurprising that it will offer the 8y OFZ 26237 (March 2029) and the 15y OFZ 26240 (July 2036), which were last offered two weeks ago. We think the results will again be strong, given that the broader risk backdrop remains favorable and the foreign share in OFZs (especially in "new" issues) remains below the levels seen at the beginning of the year. On a separate note, we advise paying the 3m FX swap rate.