Rates Weekly - February 2, 2021

> Ruble liquidity: After brief spike, O/N rates are sliding on liquidity inflow. In the middle of last week, O/N rates traded near the key rate, and the liquidity situation appeared stable. However, on Friday O/N rates spiked to 4.4-4.5%, as demand for liquidity was high and some banks borrowed significant volumes from the CBR via standing facility loans at a rate of 5.25%. This was likely temporary and this week the situation has normalized, with O/N rates down at 4.10%. Over the next five working days, which will be the last in the current reserves averaging period, an inflow of more than R1 trln is expected through the budget channel. If this happens early next week, there could be more than R2 trln in excess liquidity. Against this backdrop, the RUONIA could decrease to 4.00% and even below, while the CBR will conduct a fine-tuning deposit auction.> OFZs and rates: Finance Ministry accelerating OFZ supply. At tomorrow's OFZ auctions, the Finance Ministry will offer both the 7y nominal OFZ 26236 (May 2028) and the 15y nominal OFZ 26233 (July 2035). No limit was set for either auction. The ministry will also offer up R10 bln in the 10y inflation-linked OFZ 52003 (July 2030). Overall, we see R40 bln being placed total.