The weekly auction of OFZ federal bonds held by the Russian Finance Ministry proposed RUB5bn of fixed-rate bonds (series 26212 maturing in January 2028) and RUB4.7bn of floating rate bonds (series 29011 maturing in January 2020).

The fixed-rate auction was fully placed, receiving RUB28bn worth of bids. This made it the second consecutive successful fixed-rate auction since October last year. The record auction was held on March 25, 2013, when securities worth RUB10bn fully sold with 5.5 times the bids.

Previously in Q1, the government re-introduced auctions with floating rates amid unfavourable conditions, which revived the OFZ market. High demand for fixed-rate issues reflects stronger demand for Russian debt.

The Central Bank of Russia (CBR) is expected to cut the key interest rate to 10.8% from the current 14% by the year's end, according to the median Bloomberg survey. “Investors are betting inflation will slow, which will allow the central bank to cut the key rate,” Dmitry Postolenko of Kapital Asset Management told the agency. People are buying the longest OFZ in order to play on the anticipated significant rate cuts, he said.