Daily review of the debt markets. Europe: Yields Continue Rising with No Exception for Germany and France. Russian Eurobonds: Flat till the End of the Week. Primary Market: OFZ-26205

Europe: Yields Continue Rising with No Exception for Germany and France. Russian Eurobonds: Flat till the End of the Week. Primary Market: OFZ-26205

Russian Eurobond market closed up yesterday. Sovereign bonds added an average of about 0.25%. The growth in most corporate issues was 0.2-0.4%.
Yesterday morning ruble corporate bond market was mainly in decline, which was followed by consolidation at the reached levels in the afternoon. Trading activity was average.
Today Russian Eurobonds opened down due to yesterday’s downgrade of Spain by Moody’s by 3 notches. Russia-30 lost 0.2%, though oil added 0.35% and was traded at about 97.4$ per barrel. We believe that today and tomorrow consolidation will dominate the markets.
German and French bonds started showing negative dynamics, which, in our view, raises the worst fears. Thus, since early June the yield on German 10-year bonds has shot up from the historic minimum of 1.17% per annum to 1.5% per annum.



Trading Ideas in the Bond Market

Eurobonds:
We recommend staying out of the market.

Ruble Bonds:
Strategy Buy & hold:

Gazprom-13
VTB ВО-5, ВО-7
RSHB-10, ВО-5
LUKOIL BO-1, BO-2
Gazprom Neft-3, BO-5 and BO-6
Bashneft-3