The Ministry of Finance has not sold OFZ for the third time in a month. What does this mean for an investor

The main thing in the text:

— The Ministry of Finance canceled auctions for OFZ three times in a month: on June 24 and July 8 due to high market volatility, and on July 15 because it did not receive bids at a price it was satisfied with.

— The refusal of placement is dictated by the unwillingness of the department to borrow funds at inflated rates and the desire to prevent a further drop in the value of issues already in circulation on the market.

— The practice of suspending auctions during moments of turbulence was used in 2014-2022, and now it is purely temporary and tactical in nature until the market situation normalizes, but this is a tactical step, not a structural one. Auctions will resume soon.

— Today, investors can choose between fixed income OFZ-PD for long-term payments or floaters (OFZ-PCs) that protect against inflation by linking to the key rate.

— Compared to deposits and other instruments, OFZs allow you to record high returns for years to come with minimal credit risks and high liquidity

— It is important for investors to take into account interest rate risk, income taxes, possible reinvestment traps for floaters, as well as the risks of infrastructural freezing of trades.

— The current high yields on OFZs create excellent conditions for long-term investments, allowing you to get a stable coupon income and profit from an increase in asset value with a future reduction in the key rate.

The Russian debt market is experiencing a historic moment. The Ministry of Finance has failed to place federal loan bonds (OFZ) three out of four times in the last month: twice scheduled stock market launches were canceled due to high volatility, and the third time the auction did not take place due to a lack of bids at an affordable price. Izvestia investigated why the government has taken a pause in borrowing, how this affects quotes, and whether private investors should record double-digit returns right now.

Why has the Ministry of Finance put OFZ auctions on hold and how does this affect the market?

Usually, the Ministry of Finance enters the debt market with enviable regularity — auctions are held on Wednesdays, that is, about four times a month. The main buyers of government debt have traditionally been large institutional players (banks, investment and pension funds), but in recent years private capital has also been present at auctions and the secondary market.

However, over the past month, the Ministry of Finance has suspended the placement of new OFZs three times. On June 24 and July 8, such a decision was made, as reported on the agency's website, "in order to help stabilize the market situation." And on July 15, the auction did not take place "due to the lack of bids at acceptable price levels."

​The mechanism of the impact of new placements on the market is simple. By entering auctions with a huge volume of new securities, the Ministry of Finance withdraws ruble liquidity from the market. At the same time, new issues of OFZs are beginning to compete fiercely for investors' money both with already circulating (old) government debt issues and with corporate bonds of other companies.

​In order for banks and funds to ignore the secondary market and bring the money to the auction, the agency has to give a premium. That is, to offer a yield higher than that which has already developed on the stock exchange. As a result, new securities are now being placed at rates of 15-16% per annum and above.

Has the Ministry of Finance cancelled the placement of OFZ earlier

Canceling auctions for the placement of OFZs several times in a row is not a unique phenomenon, although it occurs infrequently. The government resorts to this maneuver in times of severe market turbulence and panic.

The last time before that, the Ministry of Finance canceled the placement two years ago — in June 2024. At that time, the market also saw a rapid increase in OFZ yields against the background of the harsh rhetoric of the Central Bank, and the Ministry of Finance chose to take a break, as it was not ready to borrow money "at any cost" at exorbitant interest rates.

​If you look at the history of the Russian market more broadly, the Ministry of Finance put placements on even longer pauses during the most acute crises.:

• 2022: from the end of February to the middle of September, the primary OFZ market was completely closed. The Ministry of Finance has not held a single auction in six months. The government understood that in conditions of a geopolitical shock and the Central Bank's 20% interest rate, it was pointless to borrow money — the market was in a coma.

• ​Spring 2020: Amid the outbreak of the COVID-19 pandemic and the collapse in oil prices, the Ministry of Finance canceled auctions for several weeks in a row in March and April to wait out the panic.

• ​August – September 2018: Due to the threat of harsh US sanctions, non-residents fled the OFZ en masse. The Ministry of Finance then canceled auctions several times in a row (almost a month without placements) in order not to add fuel to the fire of sales.

• ​Late 2014 – early 2015: The currency crisis and the sharp devaluation of the ruble also led to a series of cancelled and declared invalid auctions.

However, the current situation is significantly different from the previous ones. ​In the past, long-term auction cancellations occurred due to an external "black swan" (covid, sanctions, CBO, oil collapse). The market simply stopped functioning normally, and the Ministry of Finance put it on pause.

Now there is no stock market crash or "black swan". The economy is working, banks are making profits, and the stock exchange is trading normally. What we see today is positional warfare and bargaining. ​Banks (buyers) are on strike: "Inflation is not falling, the Central Bank is acting harshly, give us a huge premium and discount, otherwise we will not give you the money." ​The Ministry of Finance (the seller) balks: "We have a normal budget situation, we will not fix such an expensive debt for years to come and give away the papers for next to nothing."

Can the Ministry abandon the placements for a long time in 2026? No. The government has strict budget commitments and an ambitious borrowing plan (about 1.5 trillion rubles for the third quarter). However, the failure of the auction on July 15 showed that it would no longer be possible to simply "return to the market" at the click of your fingers — you need to re-negotiate the price with buyers.

What OFZ yields can you get now?

Government bonds are divided into two basic types:

• OFZ-PD (with a fixed income). The coupon amount is known in advance and remains unchanged until the paper is redeemed. Profitability is fixed for years ahead and does not depend on either inflation or the decisions of the Central Bank.

• OFZ-PC (with variable coupon, or "floaters"). The yield on them is floating: It is linked to the RUONIA interbank lending rate, which almost mirrors the Central Bank's key rate. The interest rate in the economy is growing, and payments on such bonds are automatically increasing.

Fixed income securities (OFZ-PD) are definitely more profitable for the Ministry of Finance. The logic here is purely budgetary. By borrowing at a fixed interest rate, the government knows exactly how much it will spend on debt servicing in five or ten years, even considering that the key rate is now high. The government does not take on interest rate risk: even if the Central Bank raises the rate to at least 20%, the Ministry of Finance continues to pay a comfortable 7-9% on old issues.

Investors, on the other hand, demand floating-rate OFZS during periods of turbulence. It is an ideal protective tool for banks and funds. Unlike fixed-income securities, prices for floaters do not fall when the Central Bank's policy is tightened (they always trade at about 100% of face value), and yields automatically adjust to new realities, protecting capital from inflation.

That is why in the crisis years of 2020, 2022 and 2023, the Ministry of Finance was forced to borrow huge amounts through floating—rate securities - the frightened market simply refused to lend money at a fixed interest rate. As a result, the share of floaters in the government debt structure had ballooned to a dangerous 38-40% by the end of 2015.

When the Central Bank switched to a high-interest cycle, this accumulated baggage became a heavy burden for the budget: the cost of paying floating coupons soared by hundreds of billions of rubles. Realizing this trap, the Ministry of Finance decided to abruptly change its strategy and move away from floating rates. Denis Mamonov, director of the department's debt department, aptly compared floaters with "stupid fast food" earlier this year, saying it was time for the Ministry of Finance to switch to "healthy eating" — classic OFZ-PD.

This tactic has worked for a very long time. For the entire first half of 2026, 100% of auction placements were exclusively for fixed income securities. However, the situation changed in July. Due to the collapse of quotations in the secondary market, it has become too expensive to borrow at a fixed percentage. After a series of cancelled auctions, the Ministry of Finance made concessions: on July 15, for the first time in a long time, the ministry offered a floating coupon issue to the market, but this was not enough to place it at an affordable price.

Despite the July concessions, fixed income securities still account for the lion's share of offers at secondary auctions, but their prices have collapsed, which is why yields have reached historic highs.

• Long-term classic securities, such as OFZ 26247 (due in 2039), OFZ 26243 and OFZ 26253 (due in 2038), are traded with an abnormal mathematical yield to maturity at the level of 16.1–16.3% per annum.

• Medium–term OFZ 26241 (repayment in 2032) propose to fix 15.3-15.5% per annum.

• In the segment of floating rates (floaters), the flagship issue proposed by the Ministry of Finance is OFZ 29028, the yield of which is now forming near the current key rate of the Central Bank (about 14.25% per annum).

Thus, a unique situation has developed for a private investor today: the market offers both generous fixed returns for the decade ahead and reliable capital protection in the form of floaters that bring stable 14%+ without the risk of price drawdown.

What is the advantage of OFZ compared to other financial instruments?

OFZ vs Deposits. The advertising banners of banks today are full of figures of 20% and even 25%, but in practice this is nothing more than marketing. Such rates are valid only under strict conditions, for example, for new clients of the platforms or only for the first couple of months. The real average market rate for ruble deposits for up to a year is now about 12.3–12.7%, which is significantly lower than the Central Bank's key rate of 14.25%. The reason is simple: banks include future monetary policy easing in their models and categorically do not want to fix high returns for a long time.

This is the main advantage of OFZs: by buying long-term government bonds, an investor can "stake out" a yield of 15-16% per annum for 5, 10 or even 15 years ahead. In addition, upon early withdrawal of money from the deposit, the client usually loses all accumulated interest. OFZ can be sold on any business day, having received from the buyer the accumulated coupon income (NKD) for each day of paper retention.

OFZ vs Money market Funds (LQDT and analogues). Liquidity funds generate daily income linked to the Central Bank rate. As long as the bid is high, they are extremely profitable. But as soon as the Central Bank starts a cycle of reducing it, the profitability of funds will instantly fall. In long-term OFZs with a fixed percentage, the current high yield will remain for years.

OFZ vs Shares. Investments in stocks carry the risk of capital drawdown and cancellation of dividends, and depend on corporate governance. OFZ is a direct obligation of the Ministry of Finance to return the nominal value.

OFZ vs Corporate bonds. Companies give a premium to government debt (corporate bonds can give 18-22%), but the investor assumes the risk of business default and various manipulations. In 2024-2025 alone, the market was rocked by a series of high-profile defaults, when such large issuers as Rosgeologiya, Qiwi Finance, Garant-Invest or the Monopoly logistics group could not pay off their obligations. Against this background, OFZ is a reference instrument with almost zero credit risk within the country.

There are still risks of investing in OFZs. Which ones?

In the world of finance, the word "risk-free" means only one thing: the issuer (the state) is close to 100% likely not to go bankrupt and will return your face value on the maturity date. However, on the way to this date, the investor may encounter a number of market traps, due to which it is possible to lose quite real money. Here are the main pitfalls that beginners usually stumble upon.

The main risk of OFZS is depreciation in real terms

​Many investors look at high double-digit coupons and forget that over the 5-10-year horizon, returns should be calculated not in nominal percentages, but in real purchasing power.

1. Inflation risk

By fixing the rate in the classic OFZ-PD, you can get a strictly defined amount each year, but prices in stores will continue to rise. Thus, 1,000 rubles invested nine years ago and the same 1,000 rubles that the Ministry of Finance will return in face value when redeeming the paper today are completely different in their purchasing power. Formally, there is a benefit, the state fulfilled all obligations to the last penny and regularly paid coupons. But in reality, the purchasing power of the "body" of investment itself has shrunk over the years. However, the same problem applies, for example, to deposits.

2. Interest rate risk (the main trap of long OFZs)

This is the risk that the long-term paper (OFZ-PD) will be bought, and after that the Central Bank will continue the tight cycle and raise the key rate even more. Fixed income bonds have an ironclad mathematical rule: when economic rates rise, market prices for old bonds fall. If you bought a 10-year OFZ for 1,000 rubles with a yield of 15%, and tomorrow the market rates rose to 18%, your paper will immediately fall in price on the stock exchange (for example, up to 800 rubles).

If you hold the paper for all 10 years, there will be no losses — the Ministry of Finance will still pay 1,000 rubles in face value at the end of the term. But if you urgently need cash in a year (to buy an apartment, car, or medical treatment), you will have to sell this OFZ at the current market price, which will lead to a loss due to the sale of the asset cheaper than when you bought it.

3. The Personal Income Tax Illusion

Many people look at the exchange terminal, see the figure of 16% and forget about the state. Starting in 2021, coupon income on all government bonds is subject to personal income tax (personal income tax). The broker will keep this money automatically.

Thus, if the OFZ offers 16% per annum, the real return "on hand" will be about 13.9%. This must be kept in mind when comparing securities with bank deposits (deposits have a tax-free minimum, depending on the key rate, and OFZ coupons are taxed from the first ruble if the benefits of the IC are not used).

4. Reinvestment risk (floater trap)

This risk works in the opposite direction and applies to the currently popular floating-rate OFZS (OFZ-PCs), as well as short bank deposits.

If the Central Bank defeats inflation in a year and sharply lowers the rate to 8%, the floater's profitability will instantly drop to the same 8%. It will also not be possible to transfer money to fixed—income securities - there will no longer be long-term OFZs with a yield of 15% on the market.

5. Infrastructure risk (freezing of trades)

OFZs are the most liquid instrument on the Russian market, they can be bought or sold in seconds. But history teaches us to be prepared for anything. In times of extreme geopolitical or economic turmoil (as in the spring of 2022), the Bank of Russia can simply stop trading on the stock exchange for several weeks to prevent a total sell-off and panic. During this period, it will be physically impossible to sell the bonds: the money will be frozen in securities until the regulator decides to resume trading.

Is it worth buying OFZ after the resumption of auctions by the Ministry of Finance?

Due to high loan plans, the Ministry of Finance will soon have to resume auctions, and it may have to offer investors a small premium again to raise capital. This means that market yields may remain high locally.

Today's double-digit levels of returns have historically been a rare piece of luck for those who form capital. This is an ideal moment, but it will go primarily to those who are willing to make long-term investments.

The planning horizon of an investor entering OFZ-PD should be from 2-3 years or more. In this case, the principle of double profitability begins to work.:

1. An excellent coupon flow (15-16%) is fixed for many years to come.

2. When the cycle of tight monetary policy ends sooner or later and interest rates in the economy begin to decline, prices for long-term OFZs will be powerfully overvalued. An investor who has bought securities now will be able to sell them significantly more expensive than face value, receiving additional speculative profit from the increase in exchange value.

The theses contained in the text are not an investment recommendation, but the opinion of the editors.