The FinMin issued OFZ bonds for RUB52.4bn at Wednesday’s regular auction with demand reaching a strong RUB129bn, according to the official announcement. This is the largest weekly sale since early June, which is due partly to the absence of preannounced limit and partly to the strengthening of rate cut expectations.
The FinMin sold RUB41.9bn of the 2034 fixed-rate bond at 7.11% yield. Demand was RUB79.8bn, pushing the yield down by 20bps compared to mid-September when the bond was previously offered. The 2022 floating-rate bond also attracted strong interest with bids reaching RUB49.3bn, but the ministry sold RUB10.5bn, which was the entire amount left. The average price came in at 100.27% of par.
With this auction OFZ issuance has reached RUB73.5bn since the start of September, which is consistent with the RUB420bn quarterly target. Issuance has reached RUB1.73 trillion since the start of 2019 and meeting the Q4 target will bring the 2019 gross issuance to RUB2.1 trillion. This is below the target of RUB2.26bn, but the ministry has said that domestic borrowing will be curtailed to compensate for the higher than planned Eurobond issuance this year.