Domestic investors actively replace non-residents in the Federal loan bonds (OFZ) market in May-June

Source: Central Bank of the Russian Federation in English

9 July 2020

The volumes of local investors’ investment in the OFZ market in May-June grew faster than those of non-residents. This resulted in the shrinkage of non-residents’ share in accounts of foreign depositories in the National settlement depository (NSD) to 29.6%, according to the latest issue of the Financial Market Risks Review.

The slope of the OFZ curve increased against the background of profit-taking and some strengthening of geopolitical risks. The increase in the planned volume of OFZ placement in 2020, announced by the Ministry of Finance of the Russian Federation, added to a certain growth in the premiums required by participants at auctions.
The stock market continued to see positive dynamics in industry indices with the largest growth in the transport (11.5%) and retail (11.2%) sectors. The market was supported by various categories of local participants. Non-residents and foreign subsidiary banks functioned mainly as sellers of domestic assets. In June, the volume of net corporate bond offerings reached the top value in 2020 — 230 billion rubles.
In May-June, foreign participants reduced their short positions on the ruble in currency swaps, which indicates that the situation in the Russian currency market is stabilising and that expectations of possible future exchange rate volatility risks are decreasing.
The Bank of Russia’s measures and government programmes support lending to individuals and companies. In June, the programmes provided loans to companies worth more than 200 billion rubles, and mortgage loans worth more than 100 billion rubles.
A significant decrease in the flow of applications for loan restructuring from the population and SMEs indicates a stabilisation of the situation with customers’ solvency.
In June, the population tended to less frequently allow delinquencies on loans. The share of individual borrowers who missed a loan payment for the first time in June corresponds to the values observed in early March.
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