The Ministry of Finance fused OFZ – Kommersant

After a four-month break, the Ministry of Finance returned to the practice of placing OFZs with a floating rate (OFZ-PK). At the same time, the ministry continued to weed out the most aggressive applications, satisfying less than a third of the demand. Experts believe that in order to fulfill the annual plan for borrowing, the Ministry of Finance will combine OFZ with a floating rate with classic papers.

The Ministry of Finance made changes to the tactics of borrowing in the debt market: on May 3, it offered investors two OFZ issues maturing in July 2036 (with a constant coupon yield, OFZ-PD) and in April 2035 (with a variable coupon yield, OFZ-PK – so called floater).

The issue of OFZ-PK aroused the greatest interest of the market. The last time the Ministry of Finance posted floaters in December last year.

At the last such auction, held on December 21, 2022, the demand for such securities exceeded 437 billion rubles, and the volume of placement amounted to 250 billion rubles. This time the interest in the papers was also high, but noticeably yielded to the indicators of five months ago. According to the Ministry of Finance, demand amounted to 260.7 billion rubles. As a result, the issue was placed in the amount of 75.5 billion rubles. at the weighted average price — 96.57% of the face value.

The issue of OFZ with a fixed coupon turned out to be less popular, the demand amounted to only 36.6 billion rubles, and only 23.3 billion rubles were placed. at a weighted average yield of 10.81% per annum.

Market participants expected the Ministry of Finance to return to the practice of OFZ-PK placements, but in the second half of the year, as it was in 2020 and 2022. The earlier offer may be due to falling oil prices. Spot prices for North Sea Brent oil have dropped 17% over the past three weeks to $72 a barrel, according to Investing. “Despite the increase in budget revenues in April, we expect oil prices to decline in the third and fourth quarters, which may also affect oil and gas revenues. Perhaps the Ministry of Finance wants to attract additional liquidity amid fears for global demand for oil,” said Arseniy Avtukhov, an analyst at the financial markets analysis department at Sovcombank.

In addition, the placement of floaters allows the Ministry of Finance to attract a large amount of funds due to the high popularity among banks and at lower rates compared to the classic OFZ. According to PSB Chief Analyst Dmitry Monastyrshin, the floater coupon rate is pegged to Ruonia, which is traditionally slightly below the key one. Since the beginning of the year, Ruonia has been in the range of 6.8-7.6% per annum, while OFZ yields with a fixed coupon rate of 10-12 years have been 10.5-10.8% per annum. “Due to the difference in rates compared to the classic OFZ, the placement of floaters for 750 billion rubles. will save 22.5 billion rubles on servicing the public debt, and 270 billion rubles over the entire circulation period,” says Dmitry Monastyrshin.

According to Vladimir Evstifeev, head of the analytical department at Zenit Bank, the offer of floaters will reduce the pressure on the classic sovereign yield curve, especially on its long-term segment (OFZs of this maturity have been mainly placed by the Ministry of Finance since the beginning of the year).

“In the context of interest risk concerns, such instruments are more attractive for investors than instruments with a fixed coupon, which is why the Ministry of Finance does not need to give increased premiums,” Arseniy Avtukhov draws attention.

At the same time, analysts doubt that the Ministry of Finance will switch to a more active use of floaters for early execution of the borrowing plan for this year (2.5 trillion rubles). According to Andrey Kulakov, Head of the Fixed Income Instruments Analysis Department at Gazprombank, the optimal tactic would be a uniform supply of floaters throughout the year in parallel with classical securities. “In the event of an expansion of the budget deficit and an increase in premiums at classic auctions, floaters will help fulfill the borrowing plan,” Vladimir Evstifeev believes. Due to the fact that in August large repayments on two issues for 400 billion rubles are coming. in total, in July, according to Dmitry Monastyrshin, it is possible that the Ministry of Finance will increase the placement of floaters in order to replenish the liquidity reserve.

Vitaly Gaidaev