Banks raffled repo – Gazeta Kommersant No. 228 (7429) dated 08.12.2022

After a short break, the Ministry of Finance returned to the practice of large-scale borrowing. According to the results of three auctions, the ministry attracted almost 809 billion rubles to the budget, the second result in the history of public public offerings. The actual repetition of the record three weeks ago became possible thanks to the liquidity provided to banks and large OFZ repayments. According to experts, if the situation persists, the Ministry of Finance will continue active borrowing in order to save funds from the National Welfare Fund.

The Ministry of Finance continues to raise funds at a record pace in the debt market. According to the results of the traditional three OFZ auctions – with a floating (OFZ-PK) and a fixed (OFZ-PD) rate, as well as a variable par value (OFZ-IN) – the total demand amounted to a record 1.198 trillion rubles, which is slightly higher than the previous record set by three weeks earlier (1.195 trillion rubles). However, the volume of satisfied applications was lower – 808.8 billion rubles. against 823.6 billion rubles. November 16th.

Like last time, OFZ-PK was the main demand among investors. Demand exceeded 910 billion rubles, which is 21% higher than the volume of securities available for placement. As a result, the Ministry of Finance posted bonds for the total volume of the issue of 750 billion rubles, repeating the record of mid-November.

According to Alexander Yermak, Chief Debt Markets Analyst at BC Region, four large bids (82-109 billion rubles) accounted for about 51% of the total placement volume, and 14 bids for 11-45 billion rubles accounted for another 48% . Three weeks ago, when placing OFZ-PK, the results were comparable: four applications (55–110 billion rubles) accounted for 55% of the total volume, and another 15 applications (10.5–35 billion rubles) accounted for more than 44%, specified Mr Yermak.

The results of increased demand for a new long-term floater from the Ministry of Finance were two events that predetermined the volume of attraction, comparable to the November placement during regular auctions, Vladimir Evstifeev, head of the analytical department of Zenit Bank, believes.

First, he explains, part of the demand was generated by liquidity provided by the Bank of Russia. On Monday, an auction of a one-month repo from the Central Bank was held, as a result of which banks attracted 1 trillion rubles. Secondly, the expert adds, on Wednesday the redemption of the OFZ issue for 350 billion rubles took place. A significant part of these funds could be used to purchase OFZ-PK. “Floaters are more attractive to buy with liquidity raised as part of repo with the Central Bank, since they bring profit comparable to classical issues, while hedging interest rate risk,” explains Mr. Evstifeev.

Part of the funds from the redemption went to the purchase of securities with a constant coupon. The total demand at the OFZ-PD auction amounted to 248 billion rubles, which exceeded the supply by 2.2 times. The Ministry of Finance satisfied less than 12% of applications – for 28.9 billion rubles. Yield on the cut-off price and the weighted average amounted to about 9.87% per annum. According to Oleksandr Yermak, the OFZ-PD placement proceeded at a yield that was only 1 basis point lower than the secondary market average.

In the case of OFZ-IN, the Ministry of Finance was less aggressive – with demand of 39.9 billion rubles. attracted 29.9 billion rubles, the maximum volume since October 26. The weighted average price of the issue amounted to 93.64% of the face value, yield – 3.33% per annum.

In the fourth quarter, the OFZ placement volume has already exceeded RUB 2.45 trillion, which is more than the quarterly record of October-December 2020 (RUB 2.44 trillion).

Since the beginning of the year, the volume of borrowings has reached 2.59 trillion rubles, that is, 80% of the plan, which was announced before the outbreak of hostilities in Ukraine and then formally canceled. Oleksandr Yermak assumes that the original plan will eventually be fulfilled by the end of the year.

“The Ministry of Finance has stated that it will continue to place OFZs to save the NWF as long as there is demand for government securities,” adds Dmitry Gritskevich, head of banking and financial market analysis at PSB. In his opinion, banks are most interested in floaters, so the state will continue to attract the bulk of funds through this instrument.

Vitaly Gaidaev