Rates Weekly - May 25, 2021. Offer Size at Tomorrow's OFZ Auctions Looks Modest

> Ruble liquidity: O/N rates to remain subdued after this week's tax and dividend payments, as liquidity will be ample. Over the last week, O/N rates have been subdued at around 4.7-4.8%, despite this week's tax and dividend payments, due to the ample amount of liquidity in the system. Over the coming five working days, liquidity will continue to grow, as the Federal Treasury plans to place a net R0.8 trln via deposits and repo. Meanwhile, demand for liquidity will be shrinking as we approach the end of the current reserves averaging period. Against this backdrop, O/N rates should stay subdued at around 4.7%.> OFZs and rates: Offer size at tomorrow's OFZ auctions looks modest. The Finance Ministry announced that at tomorrow's auctions it will offer the 10y OFZ 26235 (March 2031) and the 14y OFZ 26233 (July 2035), as we had expected. It set volume limits of R30 bln for the former and R10 bln for the latter (the entire amount left to be placed in the issue), with the overall offer tomorrow at R40 bln. The decision looks conservative considering the fact that roughly R45-50 bln per week is needed to hit the annual plan and R45-48 bln was placed the two previous weeks. On the other hand, this should help the ministry avoid large yield premiums at the auctions. Should the auctions be successful in this respect, we would expect OFZs to wrap up the week with gains due to the strengthening ruble.