The FinMin called off two auctions of OFZ federal bonds on February 19 worth RUB 20bn (USD 562mn). The FinMin commented that the auctions were called off due to absence of bids in the price range adequately reflecting the value of proposed securities. Series 26212 15-year bonds worth RUB 10bn and series 26214 7-year bonds worth RUB 10bn were supposed to be auctioned. As of this year FinMin is not publishing the yield guidance ahead of the auctions. Last time FinMin auctioned the same types of bonds at 7.93% (series 26212 in November) and 7.46% (series 26214 in January 2014). Last deals on MICEX with the same type of bonds were at 8.42% and 7.85%, according to Prime.
Despite further RUB devaluation on February 19 FinMin kept the amount proposed the same as last week and put series with longer maturities for the auction. Last week RUB 20bn worth of 5-year and 9-year bonds were fully placed to strong demand, after cancelling three weekly auctions in a row amidst RUB devaluation.
The Central Bank of Russia (CBR) in its latest monetary and credit policy report believes that curbing the QE programs by the American FRS is going to pressure the OFZ market and increase the yields on long-term issues by 1.2ppt-1.7ppt. This should be compensated by lowering the placements of OFZ to RUB 0.7bn in 2014 from RUB 1.22tn in 2014 and slower inflation.