Rates Weekly - June 29, 2021. Finance Ministry Keeps Weekly OFZ Offer at Minimum Level to Meet Borrowing Plan

> Ruble liquidity: O/N rates to dip as current reserves averaging period ends, rise sharply when next one begins. O/N rates have spiked to around 5.4-5.5% since last Friday, when big tax payments were made. However, until next Tuesday, which is the end of the current reserves averaging period, there will be excess liquidity in the system and demand for it will be falling. As a result, early next week the RUONIA rate could fall below 5%. However, in the next averaging period O/N rates should rise sharply given the growing expectations for a large CBR rate hike on July 23. Demand for liquidity will be very high, as banks will over-average ahead of the CBR meeting. The RUONIA will likely grow to around 5.5%.> OFZs and rates: Finance Ministry keeps weekly OFZ offer at minimum level to meet borrowing plan. Tomorrow, the Finance Ministry is set to offer the on-the-run 10y OFZ 26239 (July 2031) and the new 15y OFZ 26240 (July 2036). The offer sizes are R30 bln and R20 bln, respectively. Given Nabiullina's hawkish comments yesterday, a full placement looks to be challenging (that said, the long end of the curve remains the most resilient to CBR comments). The key thing to watch will be the yield pickup relative to the "off-the-run curve" (OFZs issued before the latest US sanctions kicked in) - if it is within 6-8 bps, we think that the auctions will not exert additional upward pressure on the secondary market.