Non-Government Ruble Bond Market Weekly

Investment Summary

1. Telecoms
Increase in liquidity in telecom sector allows to expect that current price distortions will be offset. In
particular, UTK-3 with a duration of 0.8 years is now trading at 13.4% p.a. compared to 11.2% p.a. for
UTK-3 with a duration of 0.95 years. CentreTelecom-3 offers 12-bpt premium over CentreTelecom-4,
which is unjustified given shorter duration.
2. Municipals
MosObl-5 remains underpriced relative to MosObl-4 – despite shorter duration (6 months difference) the
issue is trading at 8.99% p.a. compared to 8.9% p.a. on MosObl-4.
3. Primary Placements
Taking into account current level of rates in telecom sector (particularly for UrSvI and Megafon issues)
and high current interest to primary placements, we think that telecoms will be placed at a YTM below
9.6% p.a.