The Ministry of Finance did not begin to place the entire declared volume of OFZ at high rates

In the second quarter, as in the first, the Ministry of Finance did not fulfill the plan to raise funds in the government securities market. He prefers to avoid expensive borrowing whenever possible. Thus, at the last auction in this half of the year through OFZ with a variable coupon, the Ministry of Finance attracted less than 60 billion rubles. at almost five times the demand. A feature of the latest auctions was the activation of the St. Petersburg Currency Exchange, whose share in the primary OFZ market approached 10%.

At the last half-year auction, the Ministry of Finance went to meet the main investors – banks – and offered only bonds with a variable coupon. The issuer has not taken such steps for more than a year and a half. And the demand was not long in coming: the volume of submitted bids for the purchase almost reached 250 billion rubles, which is twice as high as the previous placement. The Ministry of Finance satisfied applications for the amount of about 59 billion rubles.

However, attraction of such a volume also required a high premium from the issuer. Andrey Kulakov, Head of the Fixed Income Analysis Department at Gazprombank, estimated the spread to RUONIA at 52 bp. which implies a spread to the liquid segment in the secondary market in the amount of 14–18 bp. p. “It is possible that market participants, understanding the goal of the ministry in terms of the amount missing for the implementation of the quarterly plan, requested an increased premium,” notes Mr. Kulakov.

The Ministry of Finance has not fulfilled the announced plan for borrowing for the second quarter in a row.

At the end of the reporting period, the total volume of OFZ placement amounted to 836 billion rubles, which is slightly less than the quarterly plan of 850 billion rubles. In the first quarter, the gap was larger: with the planned 800 billion rubles. the issuer attracted only 739 billion rubles.

The peculiarity of the second quarter during OFZ auctions was the entry of clients of the St. Petersburg Currency Exchange (SPCE), whereas earlier auctions were held exclusively on the Moscow Exchange. In total, according to the results of the reporting period, the volume of satisfied applications for SPCE exceeded 77 billion rubles, or 9.2% of the total volume of placements.

In 2022, SPCE updated the trading system on the stock market and began active work to attract clients (see “Kommersant” dated September 19, 2022). The first deputy chairman of the board of the exchange, Mikhail Temnichenko, told Kommersant that about 30 clients are currently connected to the site, including large banks. By the end of the year, it is planned to connect at least ten more banks.

Along with OFZ placement auctions, SPVB is negotiating with other bond issuers. “In April of this year, the Ministry of Finance of Belarus placed bonds worth 10 billion rubles through us,” said Mr. Temnichenko.

The purchase of OFZs at auctions through SPVB may be of interest to banks that are actively involved in the fairly developed monetary section of the site, the source of Kommersant in a Russian bank believes. Thus, they will be able to optimize the costs that arise in the event of the movement of liquidity between the sites, as well as avoid wasting time. According to the exchange, it regularly holds auctions for the placement of free liquidity of St. Petersburg, the Federal Treasury, and the Pension Fund of the Russian Federation. In particular, in May the volume of trading in the money market amounted to 3.5 trillion rubles.

But if the new platform can still compete with the Moscow Exchange when placing OFZs, then it is much more difficult in the secondary trading of government bonds. As noted at the Moscow Exchange, the daily volume of transactions with OFZ exceeds 15 billion rubles. At the same time, private investors have become an important element of the infrastructure of the government securities market – their share exceeds 10%.

During the quarter, SPCE did not conclude a single deal with OFZ on the secondary market. “Volumes will grow, on some days it is even possible to dominate due to large orders, but the likelihood that the majority will refuse to work with the Moscow Exchange is low,” Kommersant’s interlocutor on the market notes. According to a Kommersant source in a large bank, few will want to make transactions on both exchanges, “it is more convenient when all the information is in one system.”

Vitaly Gaidaev