Daily Market Monitor: The Eurobond market seems to be clearly approaching a peak, and even a minor correction in oil prices could trigger major revisions of the market

The ruble bond market remains bullish. Prices are being
supported by expectations of a slight fall in the dollar
exchange rate with yields remaining low. On Friday the Bank
of Russia placed a second bond issue at 5.19% to buyback on
July 15, 2005. Although demand at auction totaled Rub 5
bln, the Bank insisted on a low rate, and only Rub 1.85 bln of
a Rub 3 bln issue was sold. We expect that Tuesday’s
placement of Home Credit & Finance Bank bonds will be met
with healthy demand. The volume of the 3-year issue is Rub
1.5 bln.

The Eurobond market seems to be clearly approaching a
peak, and even a minor correction in oil prices could trigger
major revisions of the market. Sky-high oil prices are keeping
US Treasury yields low, but there is almost no upside
potential at current levels. Russian Eurobonds are following
benchmarks, and buying remains high-risk. Russia\'30 stands
at 98.75% (6.96% yield to maturity).