(Bloomberg) – The yield on 10-year federal loan bonds may show the maximum weekly fall since November after the announcement of US sanctions on the primary market of the Russian government debt.
Bonds went up in the middle of the week on the possibility of a meeting between the US and Russian presidents, but rates turned up on Thursday due to the announcement of new restrictive measures. Today government securities are growing amid a decrease in the sale risks after the Ministry of Finance of the Russian Federation announced on the eve of plans to place only new issues of OFZ from June 14.
“So far, the worst possible scenarios in terms of sanctions have not been realized, and even support has been received for circulating issues: after June 14, they will not be offered at primary auctions,” says Yuri Tulinov, head of the research department of Rosbank. local demand as an important support factor “.
The yield on 10-year OFZ 26235 by 4:00 pm Moscow time fell by 11 basis points to 7.06% per annum, and the fall over the week reached 25 basis points. The 26219 issue rate fell 37 basis points over the week. The trading volume of OFZ-PD, included in the RGBITR index, amounted to 27.7 billion rubles against 57.3 billion rubles on Thursday, according to data from the Moscow Exchange.
Andrey Kostin, VTB Group President and Chairman of the Management Board, said on Friday that the bank is actively investing in OFZs because “the yields are very good.” VTB bought 276 billion rubles worth of government bonds at this week’s auctions, which is almost three quarters of the record volume sold. According to Kostin, VTB’s OFZ portfolio is approximately 1.7 trillion rubles against 7.6 trillion rubles for Russian banks in general and 1-1.4 trillion rubles for “American investors.”
Despite the market’s positive reaction to the soft version of sanctions, the question of the long-term intentions of the United States remains open, warns Stanislav Murashov, an analyst at Raiffeisenbank. The premium in the ruble and OFZ quotes will decline, but will remain significant for a long period of time, he wrote in his Friday review.
The “semi-serious” nature of the announced sanctions should not affect the OFZ market situation, since it will not lead to an outflow of non-residents, especially given the expected growth in the key rate in Russia, says Alexander Losev, general director of Sputnik AM in Moscow.
“They will not go anywhere from OFZs, since there is no profitability in developed markets with such credit quality as ours,” he said by phone. “We see from practice that the difference of 5% between dollar and ruble instruments is enough for so that investors turn a blind eye to any geopolitical risks. “
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