OFZ market is planning a big demand: preconditions
The previous quarter showed good results, and the Ministry of Finance decided to continue its current borrowing strategy. The Ministry plans to bring 1 trillion rubles worth of OFZs to the market. No repayment is expected by the end of the year and this figure corresponds to the net volume of borrowing. This figure exceeds the plan, which was adopted in previous quarters – 600 billion rubles. The decision to increase the amount is due to the favorable atmosphere, which was observed in the previous period.
According to experts, the Ministry of Finance had all the conditions to sell OFZ for more than 1 trillion rubles, but additional factors played a role here. For example, in the second quarter, the first place was occupied by the recovery demand, which was due to the high level of income. The latter arose as a result of foreign investors getting rid of bonds, which was observed in March. In addition, expectations of a significant reduction in the key rate contributed to the intrigue, the Central Bank actively heated up the intrigue, which at each conference focused on this event. In addition, the 2nd quarter saw the repayment of OFZ category 26214, which totaled 232 billion rubles. Moreover, the net placement was at the level of 860 billion rubles.
However, at the moment the above mentioned factors practically do not work. The bond yields were fixed at the minimum level, including those for GEM. The Central Bank’s strategy has also changed. If earlier it insisted on aggressive reduction of the key rate, this step is unlikely, which is also noticeable in the policy of the main regulator.
Analyzing the situation, a number of experts agree that the Ministry of Finance plan will not be fully implemented. The variant of its implementation is possible, if the bonuses are increased by 5-15 b.p. to get 77 billion rubles from each auction. The Ministry’s strategy is based on the proceeds from the securities, which are designed to mature in 5-10 years – this type of bond accounts for about 700 billion rubles. However, in this case the potential for future value increase is minimal. Experts do not deny that the large number of offers and low premium to RUONIA will lead to higher yield values.
However, the results of the last auction showed that a good moment was missed and the price increase now makes no sense. Demand for OFZ category 26234, which is designed for 5 years, was extremely low – about 20 billion rubles. Their supply on the market amounted to 50 billion rubles, and they purchased bonds for only 11.4 billion rubles, with a premium of 10 b.p. on the yield, which was fixed at the close of the day before the auction.