The Ministry of Finance placed only one issue of OFZ

In unfavorable market conditions, the Ministry of Finance limited itself to the placement of bonds with floating rates. These securities are popular among banks, but are not very comfortable for the ministry, since along with the growth of the key rate, its expenses also increase. Therefore, the Ministry of Finance will continue to limit the premium, satisfying only part of the demand.

After an unsuccessful auction the previous week, on September 13, the Ministry of Finance decided to limit itself to offering only one issue of OFZ, but with a variable coupon. In the third quarter, the ministry placed at least two issues of government securities weekly, one of which was always a classic one with a constant coupon. However, against the backdrop of an increase in the key rate of the Central Bank, investor interest in such securities fell sharply; as a result, last week, in the absence of sufficient demand at an acceptable price, the Ministry of Finance was even forced to cancel two placements at once – OFZ-PD and OFZ-IN.

Therefore, according to analysts, the issuer’s decision to place only floaters meets the current market conditions and the needs of the main players in the market – banks. Earlier, on Tuesday, at the EEF, VTB head Andrei Kostin said that the bank is ready to buy OFZs, but only floaters. “With such a rate and with a trend towards its increase, fixed (bonds with a fixed coupon.— “Kommersant”) it’s dangerous to take,” the top manager noted. At the same time, according to him, the bank can buy back such securities for 0.5–1 trillion rubles.

Market participants expected significant results from the OFZ-PK placements. Demand for popular securities amounted to almost 129 billion rubles, exceeding the balance available for placement by 37%. At the same time, it turned out to be one and a half times lower than at the previous auction for this issue, held on August 30. As a result, the Ministry of Finance satisfied more than half of the requests for 73 billion rubles. versus RUB 55.9 billion last time.

The placement took place without large applications, which would indicate increased participation of state banks. According to Alexander Ermak, chief analyst for debt markets at BC Region, during the auction 76 applications were satisfied, of which three were 10 billion rubles each. and seven applications for 5 billion rubles each, providing almost 90% of the placement volume. The Ministry of Finance did not need to increase the yield premium. “The premium to RUONIA was 60 bps. p., which turned out to be lower than the results of the last auction (61 bp),” notes Andrey Kulakov, head of the fixed income instruments analysis department at Gazprombank.

Despite the increase in borrowing volumes, the Ministry of Finance’s lag behind the quarterly plan continued to increase.

According to Mr. Kulakov’s estimates, the department needs to raise 317 billion rubles at the two remaining auctions. This is difficult to achieve without more active participation of state banks in auctions.

The results of Friday’s meeting of the Board of Directors of the Central Bank, from which some analysts expect an increase of 2–3 percentage points, to 13–15%, will be important for the market (see Kommersant on September 13). The stronger the increase, the faster the regulator can return to the practice of lowering rates. “Any hint from the regulator about completing the cycle of rate increases would have a positive impact on the primary market,” notes Pavel Vintin, director of investment banking services and capital markets operations at Rosbank. Now, in his opinion, it is still premature to hope for such rhetoric.

Vitaly Gaidaev