The approaching meeting of the Bank of Russia on the key rate supported investor interest in OFZs. The total volume of demand at the auctions on April 22 was more than 434 billion rubles, which is a record since the beginning of the year. Even though the Ministry of Finance satisfied less than half of the applications, the total volume of attraction was the second largest this year. Investors are rushing to fix rates, hoping for softer comments from the regulator, which will ensure further growth in the value of bonds.
On the eve of the Bank of Russia meeting, investor activity at government bond auctions increased sharply. The total demand for two long-term OFZ issues with a fixed coupon exceeded RUB 434 billion. This is a quarter higher than last week’s result and a record figure for OFZ-PD auctions. The previous record was set on February 18, when demand amounted to 407 billion rubles.
At the same time, the Ministry of Finance acted quite harshly, cutting off the bulk of applications. As a result, less than half of the demand was satisfied through the auctions—RUB 215 billion.
After the auctions, bonds worth 43 billion rubles were sold. for non-competitive bids. In total, the result is 16 billion rubles. exceeded last week’s figure and became the second highest result since the beginning of the year. At the same time, the premium to the secondary market was insignificant. According to the assessment of the chief debt market analyst at BC Region, Alexander Ermak, when placing a ten-year issue (weighted average yield – 14.55% per annum), the premium was 2 basis points (bp), for a 14-year issue (14.52% per annum) – 6 bp. p.
After the Bank of Russia unexpectedly lowered the key rate by 50 bp at its February meeting. p., up to 15.5%, investor activity began to increase before subsequent meetings. On the eve of the March meeting, demand increased by 57%, to 282 billion rubles. The reason for this was expectations of a stronger rate cut or softening of the regulator’s rhetoric. “There is also optimism in the market now due to the protracted conflict in the Middle East. It improves inflation prospects (due to expectations of a stronger ruble against the backdrop of high oil prices.— “Kommersant”) and a reduction in the rate this year,” says Anton Prokudin, head of the bond department of Ingosstrakh-Investments Management Company.
At the upcoming meeting of the regulator, most analysts expect a reduction in the key rate by 50 bps. p., up to 14.5%.
At the same time, senior analyst at Pervaya Management Company Gleb Bobkov notes that there are concerns in the market about the economic slowdown, against the backdrop of which the Central Bank may take more decisive steps in the future to lower the rate. “Additional support for demand is provided by the high liquidity of the banking sector and the need to reinvest funds after the repayment of large bond issues and deposits opened at peak rates at the end of 2025,” notes Egor Zinoviev, an analyst at the investment company Digital Broker.
Further development of the market situation will largely depend on the actual decisions of the Central Bank on the rate, comments and adjustments to the medium-term macroeconomic forecast by the regulator. If the rate is reduced by 50 bp. and maintaining soft rhetoric, the rally in government bonds with a constant coupon and the reduction in the yield curve inversion will continue. At the same time, demand, as Egor Zinoviev notes, will finally shift from floaters to long-term fixed income securities. “If the regulator chooses a pause or gives a tough signal due to the budget deficit, a short-term correction and profit-taking by speculators is possible, which will temporarily return interest in protective instruments linked to RUONIA,” the analyst notes. At the same time, the current yield of ten-year securities in the region of 14.3–14.6% per annum may decrease to 13.5–14.0% per annum in the coming months.
According to the results of four April auction days, the volume of placement of government bonds by the Ministry of Finance amounted to 817.5 billion rubles, and the volume of attraction – 746.7 billion rubles, providing almost half of the quarterly plan. To fully implement it, according to Alexander Ermak, in the remaining time it is necessary to place about 84 billion rubles weekly, a quarter below the initial quarterly schedule.
