Daily Market Monitor: The ruble bond market reacted negatively to the CBR deputy chairman\'s guidelines for the dollar exchange rate

The ruble bond market reacted negatively to the CBR deputy
chairman\'s guidelines for the dollar exchange rate, which
actually limits the potential for further nominal strengthening
of the ruble. As that potential strengthening had been a
supporting factor, prices declined by some 0.1-0.4% for firsttier
bonds over the day on the back inactive trading. Ample
ruble liquidity is not enough to encourage purchases given
the current low yields. Developments on international
markets also introduced some uncertainty to the local
market. We believe that the situation is unlikely to change in
the coming days and see slow market decline on minimal
turnover. It is likely to stay the same for a while — possibly
until the end of the month. Then, prices could rebound, as
the year-end should bring activity both to the money market
and the bond market.
Russia\'s Eurobond market was watching international news
closely on Wednesday, although despite the number of
developments, the upshot was no significant price changes.
There was no significant reaction to the FOMC
announcement, with the Fed raising rates by a quarter
percentage point to 2.0% as anticipated. And their statement
did not contain any definite clues as to whether there would
be another tightening at the next meeting. Despite the euro\'s
feat in breaking the $1.30 mark, the dollar rebounded.
Similarly, US economic statistics had no decisive impact to
the benchmarks.
As for Russia related news — the Italian government has
decided to sell its EUR1 bln share of Russian Paris Club debt
to special government export credit agency SACE. The agency
already has EUR 4.8 bln stake of Russian Paris Club debt, so
the planned transaction is just a transfer of the rest of the
debt — although it could be the first step toward the
securitization of the debt (Italy may be willing repeat German
experience with Aries notes). Available information gives no
clear evidence for this.