13 Sep 2019 19:28

Russian Eurobonds follow UST down in week

MOSCOW. Sept 13 (Interfax) - Prices for most Russian Eurobond issues fell markedly in the past week on the back of heavy losses for US Treasuries, as yields spiked for safe-haven debt and investors turned to risk on hopes that tensions in trade relations between the United States and China will subside.

UST prices fell more than Russian bonds, sovereign spreads narrowed.

In the week as a whole the benchmark Russia-30 bond fell 0.27% in price to 112.64%. Spread between these and three-year US Treasuries narrowed 19 basis points to 116 bps.

The 2043 bond fell 2.5% in price, with yield up 18 bps to 4.14% per annum; the 2042 bond fell 2.3% - spread between these and UST with the same maturity narrowed 14 bps to 209 bps; and 2047 fell 3%, yielding 4.195%, up 19.5 bps.

The 10-year Eurobond maturing in 2027 fell 0.86% to 106.45%, with yield up 13 bps to 3.30%; the 2026 bond fell 0.92% to 109.13%, with yield rising 15 bps to 3.22%; and the 2023 bond was down 0.48% with spread narrowing 18 bps to 70 bps.

The trend on the Russian Eurobond market in the week to come will be set mainly by the outcome of the U.S. Federal Reserve's September meeting and by news regarding the U.S.-China trade talks, the Interfax Center for Economic Analysis said. A possible quarter-percent rate cut by the Fed next week combined with the prospect of further monetary easing would buoy emerging market bonds markets, Russia included. If the Fed decides otherwise, prices for UST and Russian bonds could continue to slide.