Daily Market Monitor: We see global market dynamics as the most important factor determining the performance of the Russian Eurobond market in the coming week

Despite near-panic on the equity market following news on
Yukos and Sibneft, the Rouble bond market kept its
composure Friday. The main market drivers — the strong
rouble and high rouble liquidity — remain in place, while the
problems of the oil majors have not directly impacted Rouble
bond issuers. We expect the market to see little change on
Monday, while imminent LUKoil and Baltika issues (due to be
auctioned Tuesday) could bring a little more optimism to the
market.

The Russian Eurobond market followed benchmarks on
Friday, which declined on US officials’ comments about the
US economy and dollar exchange rate, which were taken as a
sign of further dollar weakening. While the UST’10 yield
increased 8 bps to reach 4.2%, the Russian sovereign spread
increased 3 bps to 223bps. We see global market dynamics as
the most important factor determining the performance of the
Russian Eurobond market in the coming week, with local
factors having a limited impact.