Rates Weekly - June 15, 2021. Finance Ministry to Test New Primary Market Regime with Cautious Offering Tomorrow

> Ruble liquidity: O/N rates to remain stable ahead of tax payments. Last week, O/N rates rose above the key rate - then 5.00% - amid expectations of a 50 bp rate hike, which was ultimately delivered by the CBR on Friday and took effect today. The O/N interbank rate climbed to 5.36% today, which is still below the key rate, as liquidity has been ample. Over the next five working days, we expect banks to over-average ahead of large tax payments late next week, while liquidity will remain ample. We therefore expect the liquidity situation to be balanced and think O/N rates will stay in the 5.3-5.4% range.> OFZs and rates: Finance Ministry to test new primary market regime with cautious offering tomorrow. The only issue that will be auctioned tomorrow is the 10y OFZ 26239 (July 2031). A limit of R30 bln was set - below the average weekly borrowing target (around R45 bln should be raised weekly to meet the yearly plan) - and thus we find the Finance Ministry's decision relatively cautious. Still, investors will likely require a yield premium of 5-10 bps over the current secondary market curve, as the issue cannot be purchased in the primary market by US entities and also since it will be the debut placement of the paper (its liquidity will be relatively poor in the near term). Overall, we do not expect much pressure on the secondary market from the placement.