01 November 2018
Debt grounds of the emerging states followed a downside trend at large being backed by the core assets yields growth. Russian sovereign bonds were slipping gradually in terms of cost yet following the common trend.
Market situation. Debt grounds of the emerging states followed a downside trend at large being backed by the core assets yields growth. UST10 added 2 bps in terms of yield for the day and closed at 3.14%. Russian sovereign bonds were slipping gradually in terms of cost yet following the common trend. Thus, the curve moved right 1-2 bps up. Corporate issues were mixed within the frames of a narrow change. The most remarkable moves indicated the bonds of VEB due in 2022-2023, which plunged by nearly one fourth of the “figure”.
The domestic debt market was mixed on Wednesday trading with not high turnover volume. Deals to sell prevailed in the first half of the session being backed by negative dynamics in the national currency and while waiting for the results of the primary weekly auctions of the Finance Ministry. Results of the auction were multiple-valued. The authority showed it not being ready to borrow under high rates.
Market situation. The domestic debt market was mixed on Wednesday trading with not high turnover volume. Deals to sell prevailed in the first half of the session at the back of the negative dynamics in the national currency and while waiting for the results of the primary weekly auctions of the Finance Ministry. The auction had mixed results. The first issue (the short-term 25083) was sold 81% of the initially scheduled volume (meaning RUB 12.2 bn out of RUB 15 bn). At the meantime, the volume of orders filed was 1.5x above the offer volume. The weighted average yield developed at 8.29% annually, while at the trade close the note traded at 8.25% annually. Thus, the authority appeared not to be prepared to offer higher premium vs the secondary market, making the decision to cut the volume of placement. The second auction on selling the long-term 26224 series (RUB 5 bn), which did not provide for any special surprises as a week ago, the OFZ of the long duration did not manage to meet any expressive demand at the primary market and had better luck. The bid to cover reached 2.9x. Resulting from that, the Finance Ministry sold the entire volume with the weighted average yield at 8.69% and without any premium to the secondary market. Given news accompanied by the positive correction in ruble managed to support the secondary market by the end of trade. The quotes of the majority of the OFZ issues were recovering having won back the intraday loss. The long-term section showed an insignificant growth of cost for the day and the rates were down by 1-3 bps. The short-term issues lagged a bit, their yields grew 2-3 bps, which caused reduction of the angle of the curve. The daytime volume of deals did not exceed RUB 15 bn for Wednesday and was below the average. Floaters provided for approximately 13% of the given amount. OFZ with the flexible coupon showed no single trends. The most liquid issues were losing in price mildly (for instance, 29011 and 29006).
Forecast. This morning the OFZ moved without any single tends. The short-term issues are slipping in prices, while the long-term ones are going sideways. Considering growth of the national currency and a relatively positive foreign background, the sovereign segment is most likely to try to show quotes growth today.
Author: Julianna Lukyanova
Wednesday, the domestic currency was mainly plunging.
Wednesday, the domestic currency was mainly sliding. Having opened at RUB 65.65, USDRUB went above RUB 65.8 by the midday and stayed there for the most of the afternoon. However, despite the negative dynamics, note the fact that at large, loss of ruble was not that remarkable at the background of the unfavorable dynamics at the foreign grounds. Brent oil traded close to USD 77 per barrel, by the time the stats came out on the production and reserves in the US, the quotes slipped down to the level of USD 75.5. In its turn, dollar was quite confident at forex, having fixated above 97 points at DXY. Nevertheless, the given factors did not make that much pressure on ruble and by the end of the day, it showed the least loss among its peers from the EM. For instance, the domestic currency was losing about 0.4% after 6:00 pm. Its peers underperformed: TRY lost over 2%, ZAR – 1.5%, MEX lost 1.3%. As for the factors, restraining weakening of ruble, note the stability of the current geopolitical background, regarding the anti-Russia sanctions, yet the potential threats of sanctions still make the major issue on the agenda.
Author: Julianna Lukyanova