Eurobonds post marked gains in week, fall back on Friday
MOSCOW. Nov 20 (Interfax) - Russian Eurobonds posted marked gains this week as relations between Russian and the West appeared to thaw following the G20 summit in Antalya and hopes emerged that sanctions imposed against Russia might be eased.
US Treasuries edged down in price and sovereign spreads narrowed.
The Russian bond market got of to a relatively calm start to the week, when most told Interfax the international markets were reeling in the immediate aftermath of the terror attacks in Paris.
But the bulls came out on Tuesday as investor interest in Russian assets was rekindled and continued their run until the end of the week, when most issues started to fall back after hitting their highest levels since the start of the month.
Russia's benchmark 2030 bond rose 0.41% in price to 119.59% in the week as a whole. Spread between these and five-year UST narrowed 12 basis points to 157 bps.
The 2043 bond rose 4.9% in the week. The 2042 bond gained 5%: spread between these and UST with the same maturity narrowed 33 bps to 306 bps. The 2023 bond rose 1.46%, with spread narrowing 22 bps to 224 bps, 2020 rose 0.6% and 2018 gained 0.2%.
The market could correct down next week following its recent rally and due to a forecast downturn in the global markets, the Interfax Center for Economic Analysis said.
The Russian market will be affected by factors like lower prices for UST, which are likely to fall in anticipation of rate hike by the Federal Reserve in the middle of December, and the sovereign spread that has emerged during the November rally, which is too narrow to reflect either current credit ratings or oil prices.