The Ministry of Finance placed at Tuesday's auction 906.25 million lei worth of government securities (GS), offering investors 1.58 billion lei in securities. The National Bank (NBM) told INFOTAG correspondent that the demand for the state securities from investors amounted to 1.36 billion lei.

A participant of the auction told the agency that the reluctance of the issuer of the securities to increase the yield on them, which would be close to the inflation rate in the country, "prevented the Ministry of Finance from placing the entire volume of the offered issue on the market."

"For this reason, the ministry was unable to attract the desired amount of resources in the domestic market for the needs of the state budget and support the balance of payments," said one of the agency's interlocutors.

The Ministry offered three-month papers only for 80 million lei, showing that it was not interested in "short" money. The demand of investors for this paper exceeded 201 million lei. As a result of cutting off the bids of investors with higher yields, the ministry placed these state securities for 118.3 million lei. The minimum nominal yield on this paper amounted to 15.02%, the maximum - 15.89%, and the average - 15.89%.

At the same time, the ministry of finance also offered semi-annual securities worth 700 million lei. The demand amounted to slightly over 681 million lei, and the volume of offerings was recorded at 466.11 million lei. The minimum nominal yield on this paper amounted to 15.98%, the maximum - 17.20%, and the average - 16.62%.

The supply of annual securities amounted to 800 million lei, while the demand was 477 million lei. As a result of the auction these securities were placed for 321.7 million lei. The minimum nominal yield of the annual paper amounted to 17.50%, the maximum - 18.63%, and the average - 17.83%.

Professional market participants believe that the apparent reluctance of investors to place resources in annual SS at the rate of 18%, indicates high inflation expectations.

"With annual inflation of 27%, investors are not satisfied with the yield of government securities at 18%. They are more interested in the three-month papers, the redemption of which at the end of August will allow them to buy GS with a higher yield, as the price index in the third quarter according to the forecast of the NBM will peak," they consider.

Some brokers do not exclude the scenario in which the issuer of government securities may dramatically reduce the issuance of securities, because the budget will not have large needs for resources. This could happen in case of major Moldovan borrowings from external partners, which the government could purposefully use for budget needs in 2022.