OFZ yields continue to decline in September

In September, the OFZ yield curve declined again to approach the readings of early April 2018, notes the latest issue of the Financial Market Risks Review. NSD data suggest that the share of non-residents’ investments in OFZs remained unchanged in September and accounted for 29% of the market, while non-residents’ investments increased by 32 billion rubles.

In September, demand for floating coupon OFZs exceeded the August reading. Market participants can use OFZ-PK issues to manage interest rate risk without the usage of derivatives.

Net placements of ruble-denominated corporate bonds increased from January through September 2019 largely on the back of the expanding issue of banking sector bonds. The average rating of the placed ruble-denominated corporate bonds of the banking sector rose in 2019, while the number of unrated issues (or issuers) contracted.

On 16-17 September, the US money market registered a considerable rise in overnight repo rates against the backdrop of a US dollar liquidity strain caused by several factors. The Russian market experienced no considerable US dollar liquidity strain thanks to the liquidity buffer accumulated by credit institutions.

High lending activity in mortgage lending is attributable to the ongoing affordability of purchasing housing on credit. The housing affordability index is currently at an all-time high. Growth in mortgage lending comes with high quality of loans. The share of loans overdue for more than 90 days is at an all-time low (1.4% as of 1 September 2019).