Kazakhstan
On Tuesday the National Bank of Kazakhstan left the base rate unchanged at 9.00% per annum with an interest band +/- 1.0 pp. The decision was conditioned by the prevailing pro-inflationary pressure in the economy associated with persisting imbalances in the food markets, high uncertainty in the external sector, and risks of accelerating inflation.
Bonds of the Ministry of Finance of the Republic of Kazakhstan. Last week, the Ministry of Finance of the Republic of Kazakhstan placed 3 bond issues for a total of KZT22.2 bn (KZT55.1bn in the previous week). Primary market bonds’ yield with a maturity of 2.9 years decreased by 4 bps, while demand persisted. Long-term bond yields remained almost unchanged.
National Bank’s notes. Last week, the National Bank placed one 28-day issue notes of KZT192 bn with a yield of 8.9897% (8.9899% on February 22). Demand slightly exceeded supply. Last week, the National Bank paid off 28-day notes for a total amount of KZT261 bn.
In February, the volume of foreign investments in government securities of the Republic of Kazakhstan reached a record high of T782 bn (+ KZT177.8 bn in February 2021, + 162.4% yoy). The bonds of the Ministry of Finance accounted for KZT182 bn, while the volume of investments in NBK notes amounted to KZT600.2 bn.
Corporate issuers' instruments. On March 1, Halyk Savings Bank of Kazakhstan JSC announced the early redemption of its bonds (BTASe16), issued in the amount of $750 mn with a coupon rate of 5.5% and maturing in 2022. The bank redeemed bonds for a total of $248 mn ahead of schedule.
On Friday, Kazakhstan Stability Fund JSC placed 7-year and 10-year bonds for KZT33.4 bn.
The regional market
Inflation in the Russian Federation in February 2021 accelerated to 0.78% mom from 0.67% mom in January. In annual terms, inflation accelerated to 5.67% from 5.19% in January, which is the highest value of annual inflation since November 2016 (5.8%). The main contributors to CPI in February 2021 were food and non-food products, prices for which increased by 7.72% yoy (7.0% yoy in January) and 5.7% yoy (5.1% yoy in January) respectively Prices for services was 2.91% yoy (2.8% yoy in January). The Central Bank's inflation target for 2021 is 4.0%.
In February 2021, the Moscow Exchange registered a record inflow of 883.4 thousand of private investors, totaling 10.3 million. In February, non-residents invested 29.5 bn rubles in Russian shares on the Moscow Exchange, 90 bn rubles in bonds, and exchange-traded funds (BIFs and ETFs) - 12.6 bn rubles. I Investments in debt securities shared the most of 74% of corporate bonds, 22% - of government bonds and 4% - of Eurobonds.
Interest rates on the Russian government debt market continued to rise last week. The Ministry of Finance of Russian Federation placed an OFZ-PD issue (with constant income) totaling RUB 90 bn, with a maturity date of July 16, 2025 and a weighted average yield of 6.17% per annum. The yield on the previous OFZ-PD issue with the same maturity was 5.69% per annum. In addition, there was a placement of 10-year OFZ-IN (with inflation-indexed par value) in the volume of 14.2 bn rubles and a weighted average yield of 2.61% per annum. The yield of the previous similar issue was at 2.49% per annum.
Ukraine. Annual inflation in February of 6.1% exceeded the previous key rate of 6%. Amid accelerating inflation on March 4, the NBU raised the rate from 6.0% to 6.5%, resulting the yield on OVDPs to remain strictly positive in real terms. At the moment, the yield curve of the government securities of Ukraine has a sharp upward slope from the key rate of 6.5% to 8.5% for 3 months and then to 12% for 3 years.
Historically, the NBU was a proponent of the development of the Ukrainian domestic debt market. In 2015, the bank fully monetized UAH 300-400 billion of OVDP issues . Subsequently, its relative share began to fall, as banks joined, and since 2020 the non-residents has entered the market. The current structure of OVDP holders is as follows: NBU - 36%, banks - 48%, other residents - 5%, non-residents - 11%.
The Ministry of Finance of Azerbaijan on March 2 issued 3-year bonds in the amount of 30 million manats ($ 17.6 million) with an average weighted yield of 8.43% per annum. On February 23, 2021, bonds were placed with a similar volume, maturity and weighted average yield of 8.25% per annum.
On March 2, the Ministry of Finance of Georgia issued 2-year benchmark bonds in the volume of 20 million lari ($ 6 million) with an average weighted yield of 7.99% per annum. The yield on the previous issue of benchmark bonds with a similar maturity was 8.03%. In addition, 6-month treasury bills were issued for a total of 15 million lari ($ 4.5 million) and a weighted average yield of 8% per annum. The yield of the previous issue with similar terms is the same.
