2 Feb 2018 19:29

Russian Eurobonds recover for most of week following marked Jan 26 losses

Prices for the bulk of Russia's Eurobond issues, which fell markedly on January 26, spent most of the past week recovering after markets realized that the U.S. Treasury Department's so-called "Kremlin list" does not portend a marked tightening of sanctions against Russia.

However Russian bonds started to fall again on Friday, closing down for the week as a whole.

In the week as a whole the benchmark Russia-30 bond fell 0.04% in price to 114.65%. Spread between these and four-year US Treasuries narrowed 5 basis points to 97 bps.

The 2043 bond fell 0.03% in price and the 2042 bond was unchanged - spread between these and UST with the same maturity narrowed 20 bps to 193 bps; the 2026 bond fell 0.24%; the 2023 bond fell 0.72%, with spread unchanged at 95 bps; and the 2020 bond fell 0.12%.

The new Eurobond maturing in 2047 rose 0.18% to 105.22%, with yield down 1 bp to 4.91%; but the new 2027 bond fell 0.87% to 102.21%, yielding 3.96%, up 11 bps.

The Eurobond market is likely to trend down in the week to come amid negative signals from the world's capital markets, including oil, the Interfax Center for Economic Analysis said.

The world capital markets could deteriorate under pressure from higher rates on US Treasuries prompted by expectations that inflation will quicken as the result of tax reforms. Oil prices due to the forecast strengthening of the dollar against the world's major currencies.