As a result of placements of three OFZ issues, the Ministry of Finance attracted less than 59 billion rubles
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On the eve of the Central Bank meeting on the key rate, investors showed caution at OFZ auctions. As a result of placements of three issues, the Ministry of Finance attracted less than 59 billion rubles, of which more than half fell on securities with a floating par value. Given the improvement in the situation with the budget deficit in May, the issuer more strictly cut off aggressive bids when placing OFZs with a constant coupon, which leads to a decrease in interest in such securities.
In early June, the Ministry of Finance reduced activity in the OFZ primary market. Based on the results of three placements on June 7, within which two OFZ issues with a constant coupon and one OFZ issue with a variable par value (linkers) were offered, the ministry sold securities for only 58.8 billion rubles. This is almost 6% lower than the previous week’s result and more than 30% less than the volume of borrowings on May 17, when three auctions were last held. In general, almost 70% of submitted applications were satisfied, the volume of which amounted to 85.4 billion rubles.
The shortest issue of government bonds maturing in August 2029 turned out to be the most demanded. Demand for it amounted to 48.6 billion rubles, but the Ministry of Finance placed only 25.26 billion rubles. The 13-year notes were placed with the full balance available for placement (RUB 7.5 billion) with demand amounting to RUB 9.9 billion. Both placements were held with a minimum premium to the secondary market.
58.8 billion rubles
amounted to the volume of OFZ placement on June 7, 2023
Andrey Kulakov, Head of the Fixed Income Instruments Analysis Department at Gazprombank, estimates that for long-term securities it amounted to 4 bp. p., and for less long securities – 5 b.p. which is slightly above average. “We can talk about the preservation of the conservative tactics of the Ministry of Finance on the placement of new public debt with cutting off aggressive applications,” said Dmitry Monastyrshin, chief analyst at PSB.
The Ministry of Finance can afford to cut off the most aggressive bids against the backdrop of improved budget execution indicators. At the end of May, it was executed with a small surplus of 13 billion rubles. after the deficit shown in April in the amount of 1.3 trillion rubles. “There is no strong pressure from the budget, so the Ministry of Finance continues the conservative tactics of OFZ placement,” said Mikhail Vasilyev, chief analyst at Sovcombank.
However, this tactic, according to analysts, has a negative impact on investor demand for bonds with a constant coupon. In addition to this, investors took a wait-and-see approach ahead of the Central Bank’s meeting on the key rate, which will be held on Friday.
Mikhail Vasilyev believes that at this meeting the regulator will keep the rate at 7.5%, but there are risks of the regulator’s rhetoric shifting to the “hawkish” side.
“Investors are in no hurry to buy OFZs, since there is no shortage of new securities, and an increase in the Central Bank’s rate or a tightening of the regulator’s signal carries risks of negative revaluation of bonds,” Dmitry Monastyrshin notes.
At the same time, investors continue to willingly buy OFZs with a variable denomination linked to inflation, and the Ministry of Finance satisfies a significant part of the applications. The volume of placement of the linker amounted to 26 billion rubles. with demand of 26.9 billion rubles. At the same time, market participants note a high concentration of applications, the five largest accounted for 89% of demand. “The rare offer of inflationary OFZs makes them interesting, especially given the expectations of inflation acceleration in the second half of this year,” says Vladimir Evstifeev, head of the analytical department at Zenit Bank.
As a result of the last auction day, the Ministry of Finance lagged behind the quarterly borrowing plan a little more. According to Andrei Kulakov, at the three remaining auctions, the department will have to raise 255 billion rubles, or 85 billion rubles each. for one auction day, which is higher than the original plan (70.8 billion rubles).
But this is quite a realistic figure, given that the Ministry of Finance can more actively place securities with a floating coupon – floaters. “The quarterly plan serves as a guideline for the Ministry of Finance and investors, and deviations from it are the norm of previous years,” notes Mikhail Vasiliev. According to him, at present the ministry has a choice – to use the reserves to finance the budget deficit or to increase the rate of OFZ placement in the second half of the year, mainly through floating-rate securities.
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