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Friday, 15 December 2017

Russia ebbs and flows

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Russia’s bond market is mirroring the ebb and flow of the cricket at Lord’s.

After opening firmer to rise about 40c from Friday’s close, peaking at 114.245, Russia’s benchmark 2030 bond then sagged to an intra-day low of 113.686, according to Tradeweb, before beginning to go up again. As of 1145BST, the price was quoted around 113.80 on the bid side, a level that is marginally off Friday’s close.

It’s still unclear if there will be further sanction imposed against Russia and, if so, how severe they will be. A meeting of Europe’s foreign ministers in Brussels tomorrow should provide a better picture.

“After the US sanctions [last week] we saw a lot of sellers but after the [Malaysian Airlines] plane came down not so much – in fact some buyers came back to the market,” said a trader. “But the continued noise over the week has seen that change a bit today. It’s definitely a bigger risk off day in Russia than we saw last week.”

Ukraine, which had a strong rally on Friday, is also weaker this morning with the sovereign’s 2023 notes down about 1/4pt to 93.971. “Ukraine is a little bit down on cash, but there are still a few shorts that people need to cover,” said the trader.

Elsewhere, the market is relatively well bid with Turkey and CEE sovereigns doing well. As for new issues, both of South Africa’s recent notes are trading above re-offer though the dollar bond is doing better.

In the primary market, Tunisia has mandated Natixis and JP Morgan for a new seven-year US-AID backed bond issue. More details are expected to follow during the US hours.

Meanwhile, Kuwait Energy is wrapping up a final day of calls. The company is eyeing a US$300m five-year non-call three note.

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