Russian govt OFZ bond prices rise for second day in Moscow Exchange main trading session, investors upbeat

MOSCOW. March 22 (Interfax) - Prices for most federal loan bonds or OFZ are rising during the main trading session on the Moscow Exchange for the second straight day, by 1%-5%.

Yields on long-term fixed-rate OFZ-PD issues fell 12.9%-13.3% in price by the middle of trading, and yields on short-term bonds were down to 15-16.8%, below the Central Bank's key rate of 20%. Trading is on the thin side with no actual sellers.

OFZ started trading after a three-week pause on Monday. OFZ-PD prices fell during the first hour in Monday's preliminary auction, from 10 to 11 a.m., by 1%-32%, but some big orders to buy them had a stabilizing effect: prices swung up when the main trading session began on the Moscow Exchange at 1:00 p.m. and these bonds had pared some of the early losses by closing at 5:00 p.m.

Prices for OFZ-PK floating rate and OFZ-IN inflation-linked bonds also rose on Monday.

The positive trend persisted during afternoon trading on Tuesday. Market participants are generally upbeat about the market's prospects in the expectation that the Central Bank's key rate will not remain at 20% per annum for long, that it will in time come down in an upside for OFZ, especially the long segment.