OFZ: Institutional investors build exposure to OFZ, but pace is likely to decline

RUSSIA ECONOMICS - Report 28 Jun 2021 by Evgeny Gavrilenkov and Alexander Kudrin

Russian institutional investors continued to build their OFZ portfolio in 1Q21, according to CBR data, by R46 bln (1.8%). Despite the negative dynamics of ruble interest rates in the beginning of 2021, they continued to increase their exposure to OFZ, adding 2% in nominal terms in 1Q21. We suppose the industry will continue to express demand for sovereign bonds in line with the pace of growth of its asset base. The net increase in OFZ holdings by local institutional investors for FY21 may reach R100 bln, which is not enough to consider them a significant source of demand for Minfin’s ambitious borrowing program (R1.7 trln in net terms).

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