MOSCOW, July 28 (Reuters) - The Russian finance ministry on
Wednesday sold the largest amount of its OFZ treasury bonds at
weekly auctions since April 14, the eve of the day when the
United States announced new sanctions against Russia.
Russia's borrowing success comes after the inflow of
foreigners' money into OFZ bonds last week increased at its
fastest pace so far this year, amid expectations that a sharp
rate hike by the central bank could hasten the end of the
monetary tightening cycle.
The country's central bank on Friday raised it key rate by
100 basis points to 6.5% to curb stubbornly high inflation and
indicated that further rate increases were still possible.
On Wednesday, the finance ministry sold 70.54 billion
roubles ($957 million) worth of OFZ bonds maturing in 2029
and 35.99 billion roubles in bonds due in 2036
This was the largest daily placement since mid-April when
the United States unveiled new sanctions that came into effect
in mid-June and barred its banks from buying rouble-denominated
state bonds, such as OFZs, directly from Russia.
Demand for OFZs at two auctions combined reached 158.6
billion roubles, its highest since June.
OFZ yields, which move in the opposite direction to prices,
declined earlier this week "supported by fresh purchases by
nonresidents and continued interest from locals," said Sberbank
Even though foreigners stepped up buying long-term OFZs
recently, volumes roughly halved from last year, said Arnak
Grigoryan, head of fixed income and derivatives at Citi in
"Even though the trading volumes declined, the would-be
buyers of OFZs remained more or less the same: Europe, Asia and
the United States," Grigoryan said.
After the 100-basis-point hike to 6.5%, yields on 10-year
OFZ treasury bonds fell to 6.89% on Wednesday, their lowest
since March, from levels of up to 7.27% seen a week ago
"We think that many market participants expect the
significant tightening of CBR monetary policy to help push
inflation back down to the CBR's target quickly, meaning that
further rate hikes may not be necessary," Sberbank CIB said.
($1 = 73.7030 roubles)
(Reporting by Andrey Ostroukh; additional reporting by Vladimir
Abramov; Editing by Steve Orlofsky)