Russian Fixed Inocme Daily

FX and money market

On Monday, the rouble dropped slightly against the dollar following the euro/dollar exchange rate and traded in the range of 26.92-26.94/USD. The rouble remained stable against the bi-currency basket, although the market is expecting another jump of three-seven kopecks over the basket in the next few days. Today, the international market is awaiting US macro data starting with existing home sales and later in the day, the consumer confidence index, which could influence the euro/dollar and consequently, the rouble. Today we see the rouble in the range of 26.88-26.93/USD.
In the money market, rouble liquidity remains solid, with the overnight rate close to 0.5% and the one-month rate at 3.5%. Today, Russian companies will pay excise and mineral extraction taxes, although we do not expect any serious liquidity squeezes.

Rouble bond market

On Monday, sentiment on the rouble debt market was positive on the back of healthy rouble liquidity and the lack of any negative factors from external markets. Interest was seen in long OFZs and the first-tier corporate sector, while trade volumes were average. Uncertainty in external markets is making investors more cautious and selective. Despite foreign investors being attracted to the market by increased expectations of further rouble appreciation, they prefer short-term papers and their demand for long-term bonds is rather limited.

Today the situation in the market should remain stable and our view for it is neutral with a positive shade.

Today in the primary market a new bond will be placed:
Gorodskoy supermarket (Azbuka Vkusa)

Issue parameters:
Size – RBL1bn, quarterly coupons, term to bullet maturity – three years, 1.5 years put option.

Ratings:
The issuer is unrated by international rating agencies.

General description:
The issuer is “Gorodskoy Supermarket”, which operates a retail chain under the brand of Azbuka Vkusa (founded in 1992). The company is a group of premium-class retail enterprises providing a wide range of delicacies and high quality products, targetted at people with average and high levels of income. As of 2006, Azbuka Vkusa includes twelve shops located in Moscow’s most prestigious districts.

Ownership structure:
The company is owned by four people having equal shares.

Pricing:
Lead managers estimate a coupon rate at 11-11.25% which corresponds to a YTP of 11.46-11.73%.