23.10.2021

Russian sovereign Eurobonds closed in positive territory despite falling oil prices

Yesterday morning, Russian sovereign Eurobonds began to rise in price against a favorable external background. The return on the underlying asset was noticeably decreasing, which ensured the interest in Russian securities, however, trading activity remained low.

After the publication of the IEA monthly report, oil prices began to fall, and the yield on UST10 increased slightly in the afternoon. As a result, Russian sovereign Eurobonds lost some of their morning gain, but remained in positive territory by the end of the day, as did securities of other emerging markets.

Long issues gained 0.3 pp yesterday, having declined 2 bp in yield. In the middle section of the sovereign curve, despite the drop in oil prices, yields dropped slightly more, by 2-5 bp, which ensured a 2-3 bp reduction in spreads to swaps. Russia’s five-year CDS spread narrowed slightly yesterday by 1 bp. up to 129 bp

In the corporate segment, quotes rose moderately, banking sector Eurobonds are still among the leaders

In the corporate segment yesterday, there was also a moderate growth in quotations for almost all securities, while the banking sector’s Eurobonds retained their leadership. Among the issues of state banks, the best result was shown by the “perpetual” subord of GPB, which added 0.3 pp. from par. Securities of other first-tier banks increased in price by an average of 0.1-0.2 percentage points. Eurobonds of private banks showed similar dynamics.

We note only the multidirectional movement of quotations of Promsvyazbank securities: for example, the senior issue PROMBK’19 (YTM 5.5%) gained 0.7 pp, while the subord PROMBK’19 (YTM 11.8%) lost 0.2 pp. .NS. from par. Long Eurobonds of Gazprom managed to gain 0.2–0.3 pp in price, however, in the oil and gas sector as a whole, the growth of quotations did not exceed 0.1 pp. Among Eurobonds of metallurgical companies, the best result was shown by NLMKRU’23 (YTM 3.8%), which gained 0.2 pp. The rest of the sector added about 0.1 pp. from par.

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