Daily Market Monitor: The Russian Eurobond market is still waiting on tenterhooks for the Paris Club decision on a Russian proposal to pay back part of its debt

The downward correction on the rouble bond market that
followed the Victory Day weekend seems to have petered out and the
market looks set to be driven by liquidity and exchange rate
movements. Despite negative global dollar trends, we expect the
market to be more sensitive to liquidity, which is sound at present with
a seemingly bright outlook. However, approaching social tax
payments on May 16 may cause some contraction in liquidity.
The Russian Eurobond market is still waiting on tenterhooks for
the Paris Club decision on a Russian proposal to pay back part of its
debt, with an answer likely coming next week. Although an agreement
by the group of creditor nations to accept the settling of some part of
Russian debt at par would not bring an immediate sovereign rating
upgrade, especially by the more conservative S&P, it will definitely
enhance the contraction of Russia’s credit spread.
On Thursday, the Russian Eurobond market saw small growth. The
EMBI+Rus spread expanded by 1 bps, while the Russia’30 bonds
yield contracted by 1 bps to 6.1% following the benchmark’s
downward movement of 2 bps to 4.18%.