Rates Weekly - December 15, 2020

> Ruble liquidity: Overnight rates to stay elevated until December 25, but could drop at the very end of the year. The new reserves averaging period started last Wednesday, which meant demand for liquidity picked up, and the RUONIA rebounded to quite close to the key rate. The liquidity situation, meanwhile, is balanced. Over the next five working days there will be redemption of R1.45 trln of Federal Treasury deposits. It is likely that not all of this amount will be returned to banks via budget spending, new deposits or Federal Treasury repo. We see liquidity being in balance over the next week, although banks will likely still want to over-average ahead of tax payments on December 25, which we estimate at about R1 trln. So, demand for liquidity will likely remain high, while a large amount of budget funds could be disbursed during the last working week of this year. As a result, we expect the RUONIA to remain quite high at 4.2% until December 25, and see it dropping to 4% and potentially lower only at the very end of this year.> OFZs and rates: We expect the CBR to hold the rate unchanged on Friday. We now expect the key rate to be left on hold until there is a slowdown in inflation. At tomorrow's auctions, the 5y OFZ 26234 (July 2025) and 10y OFZ 52003 (July 2030) will be offered, both without limits. Based on demand at the previous actions and the fact that this could be the last auction of a nominal issue for the next four weeks, we think that a total of R30-40 bln could be sold.