Primary Market
Despite global risks, today’s auction of the 25079 issue was rather successful: the bid/supply ratio exceeded 2x and MinFin placed 91% of the RUB20bn on offer. In terms of yield, demand was close to 7.70% while the weighted average yield amounted to 7.67%. After the auction, deals in 25079 were priced 5-6 bpts higher than the placement price.
Observations and Recommendations
Meanwhile, our model does not suggest that aggressive growth in OFZs will continue, despite the continuing record spreads to currency swaps. In our view, the 25079 issue was placed successfully due to the momentum seen since the beginning of the year and the OFZ yield curve compressed considerably (25-30 bpts). We think the IMF’s call for an extra $500bn ($885bn in total) to protect the global economy from the EU crisis is in effect official acknowledgement that the rescue funds are currently quite limited.
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