closer to the end of the quarter, the Ministry of Finance stepped up the placement of government bonds

The end of the quarter and the statements of the Central Bank about a possible increase in rates are forcing the Ministry of Finance to increase the attraction of funds in the bond market. At the latest OFZ auctions, he offered floating-coupon bonds that were less comfortable for him, but popular with banks. The issuer managed to significantly increase the proceeds from auctions, but also by providing an additional yield premium.

Toward the end of the quarter, the Ministry of Finance stepped up the placement of government bonds. At auctions held on Wednesday, June 14, the issuers placed bonds of two issues in the amount of 106.6 billion rubles. This is the fourth result since the beginning of the year, and the Ministry of Finance raised large amounts in January-February, against the backdrop of a liquidity surplus in the banking system and a decrease in fears of an increase in the Central Bank rate (see “Kommersant” dated February 2). The current placements took place under market conditions that are clearly not in favor of the issuer. According to Alexander Yermak, Chief Analyst for Fixed Income Markets of BC Region, against the backdrop of a sharp weakening of the ruble, “since the beginning of this week, there has been a negative price dynamics for most of the medium and long-term issues.”

To increase the investment attractiveness of auctions, the Ministry of Finance offered investors bonds with a floating coupon (floaters) for the second time in a month. The volume of placement of these securities amounted to 69.3 billion rubles. According to Andrey Kulakov, Head of the Fixed Income Analysis Department at Gazprombank, this is close to the results of the floater placement in May (RUB 72.3 billion), but demand was noticeably lower – RUB 117.5 billion. (against 260 billion rubles).

According to Vladimir Malinovsky, head of the debt market analysis department at Otkritie Investments, investors’ interest in floating-coupon bonds increases either when interest rates rise in the market, or during periods of uncertainty that may lead to such growth.

“The rhetoric of the Bank of Russia following the results of recent meetings is becoming more and more hawkish – the regulator talks about growing pro-inflationary risks and scares investors with a possible increase in the key rate at the next meetings,” he notes.

The placement volume of the classic issue amounted to 37.3 billion rubles, with demand of 55.3 billion rubles. According to Alexander Yermak, chief analyst for debt markets at BC Region, Alexander Yermak, against a negative background, the demand for OFZ-PD decreased compared to the previous auction a month ago, and the “aggressiveness” of applications increased, as evidenced by the growth of the “premium” for investors to 5 bp. . points on weighted average yield (from 3 bp in March-May). According to Dmitry Monastyrshin, chief analyst at PSB, the yield on the placement of the paper was the highest out of 10 auctions held this year.

According to market participants, as a result of past auctions, the quarterly plan was fulfilled by 82.4%. And for its implementation in the remaining two auction days, it is required to raise less than 150 billion rubles.

According to Andrey Kulakov, at the two remaining auctions in June, the Ministry of Finance will probably retain the conservative tactic of cutting off the most aggressive bids and will be able to sell a combination of OFZs (classic, inflationary, floaters).

At the same time, according to the head of the DCM direction of the corporate finance department at Tsifra Broker Maxim Chernega, given the tightening of verbal interventions by the Bank of Russia and hawkish rhetoric, as well as the fall of the ruble, investor requests will continue to grow. In his opinion, if the Ministry of Finance does not reconsider its approach – we place as much as we can – then the plans to attract funds may be frustrated, or at some point their implementation will cost much more.

At the same time, as Dmitry Monastyrshin notes, the development scenario for the next OFZ auctions will largely depend on the need for the Ministry of Finance to raise funds to cover the current budget deficit. The data on the preliminary execution of the federal budget in May showed quite balanced volumes of revenues and expenditures, however, it is still difficult to say what the situation is like in June.

Vitaly Gaidaev, Dmitry Ladygin