Eurobonds fall in week as sanctions risks mount
MOSCOW. Feb 15 (Interfax) - Prices for most Russian Eurobond issues fell moderately in the past week as sanctions related risks mounted and investor appetite for risk cooled somewhat.
US Treasuries also fell in price, and sovereign spreads were little changed.
However reaction to the latest news that fresh sanctions might be imposed against Russia was more subdued than in similar situations last year, suggesting that sanctions risks, while certainly a downside, are becoming less pronounced.
The decision by Moody's to upgrade Russia's sovereign rating to investment level "Baa3" with stable outlook at the start of the week had little influence on the Eurobond market, with prices rising only slightly amid general decline in investor appetite for emerging market assets at the start of the week.
In the week as a whole the benchmark Russia-30 bond fell 0.22% in price to 110.72%. Spread between these and three-year US Treasuries was unchanged at 133 bps.
The 2043 bond fell 0.62% in price, with yield up 5 bps to 5.19% per annum; the 2042 bond fell 0.63%- spread between these and UST with the same maturity widened 2 bps to 242 bps; 2020 fell 0.08%; the 2026 bond fell 0.58%; the 2023 bond fell 0.25% with spread widening 1 bp to 161 bps; the Eurobond maturing in 2027 fell 0.5% to 97.01%, with yield up 7 bps to 4.69%; and 2047 fell 0.3% to 97.56%, yielding 5.42%, up 2 bps.
The Eurobond market is unlikely to show a clear trend in the week to come amid mixed signals from the international capital markets and if, as forecast, pressure on Russian assets caused by sanctions-related news eases somewhat, the Interfax Center for Economic Analysis said.
News regarding possible sanctions against Russia has re-emerged as the main downside for Russian bonds, while ongoing uncertainty over trade talks between the United States and China will take the edge off investor appetite for emerging market assets in general, the analysts said.