Page 105 - RusRPTFeb23

This brought the total 2022 OFZ issuance to RUB3.28 trillion, up by 25% year on year and within just over the full-year RUB3.26 trillion borrowing plan, RBC business portal reported.
As reported by bne IntelliNews, facing a looming fiscal squeeze, the Finance Ministry re-entered the federal ruble bond market in September. But facing a lack of bids at acceptable price levels or high volatility, the FinMin changed its strategy and started offering limitless auctions with high premiums of three types of OFZ bonds: fixed-income “fixies” OFZ-PD, variable coupon “floaters” OFZ-PC and inflation-linked “linkers” OFZ-IN.
In the final auction of 2022 the demand exceeded the supply almost two-fold at RUB610bn. The demand for OFZs was still driven by large state-state controlled banks, which attracted liquidity from the Central Bank of Russia (CBR).
The analysts surveyed by RBC noted that FinMin met the OFZ borrowing target due to OFZ floating rate “floater” bonds that sold a total of RUB2.5 trillion, mostly to banks that use them to minimise interest rate risks.
It is estimated that FinMin could use up to RUB1.4 trillion of OFZs raised to finance the budget deficit. The ministry is expected to continue to borrow as much as it can as long as the market allows it, as the fiscal risks rise with a looming global recession, the decline in commodity prices, and persistent sanction uncertainty.
“Floaters” are expected to remain the largest issues on offer from FinMin in 2023, as in the absence of non-resident buyers the Russian banks will remain the main market participants.
105 RUSSIA Country Report February 2023 www.intellinews.com