Russian/CIS bonds: step backward
Yesterday, Russian/CIS bonds failed to strengthen further, likely in the wake of some profit taking. In the high grade space, price slippage was mostly in oil and gas names: LUKOIL issues declined 30-50bp in price, while SIBNEF 22 (YTM 6.23%) and ROSNRM 22 (YTM 6.13%) nudged down 30bp. Separately, subordinated SBERRUs lost 30-40bp in price. The Russian sovereign curve closed unchanged, except for the long end, which widened marginally 3-4bp in yield. In the sub-investment space, AFKSRU 19 (YTM 10.70%) fell 3.0pp to 86.56. MOBTEL notes also came under pressure, having slipped 50-80bp in price. Recent top-performers – VIP, EVRAZ and CHMFRU – also corrected 30-50 downward pricewise. At the same time, demand for PHORRU 18 (YTM 5.06%) persisted, having pushed the price 40bp higher; subordinated AKBHC 18 (YTM 13.10%) and PROMBK 21 (YTM 11.19%) firmed about 50bp in price. In the CIS space, the correction was more pronounced: Ukrainian sovereign issues rolled down 1.0-1.8pp in price, DTEKUA 18 (YTM 24.61%) dropped 2.4pp, METINV 18 (YTM 22.08%) fell 1.2pp. Kazakh bonds were also trading softly: in particular, KAZNMH 23 (YTM 5.19%) slid 60bp in price, while KZOKZ 18 (YTM 3.99%) and KTZ 42 (YTM 6.22%) lost 50bp.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst
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