Eurobonds Declined Following Strong Growth of Treasuries’ Yields.

On Wednesday Russian Eurobond market was dominated by downward dynamics; bond markets declined on strong growth of US treasuries’ yields after quite strong results had been released for US industrial production in July. Sovereign Eurobonds lost about 0.4%; corporate bonds declined between 0.2-0.3%.
Sales prevailed in OFZ market. No single dynamics formed in the ruble corporate bond market.
By and large, US statistics for July came out mostly positive, which, in turn, lowers the probability of firing up the printing press so much expected by market players. To some extent this news drove yield growth in treasury market. However, we see one more reason. Since the beginning of the month UST-10 yield has increased by 35 b. p. from 147 b. p. to 182 b. p., which has become one of the strongest increases this month. Evidently, it is also due to capital leaving safe haven for emerging markets, including share markets. Another proof for this is the fact that Russia-30-UST-10 has shrunk by 12 b. p. since early August.
However, yesterday Russian Eurobonds followed treasuries. Russia-30 lost 0.6% and dropped to 124.0% of the nominal. Russia-42 decreased by almost 1.0% dipping to 117.0% of the nominal.
On Thursday morning external background has been neutral. Most instruments were traded largely unchanged compared to the previous trading day. Yet Russia-30 continued to decline and lost about 0.2% as UST-10 yield continued to rise. We don’t rule out that Russian Eurobond market will continue its moderate decline today.

Trading Ideas in the Bond Market

Eurobonds:

Alfa-Bank-17
Evraz-17, Evraz-18
VTB perpetual Eurobond
Belarus-18

Buy & hold strategy:

Russian Standard-17
Ukraine-13
Promsvyazbank-14, Promsvyazbank-15
TCS Bank-14
HCFB-14
KKB-13, KKB-14

Ruble bonds:

OTP Bank BO-3
Russian Standard Bank BO-2
Tatfondbank BO-1, BO-4, BO-5
Promsvyazbank Bo-2, BO-4
CBM BO-5
Renaissance Capital Bank BO-3

Buy & hold strategy:

VTB BO-5, BO-7
RSHB-10, BO-7
Rusnano-4
NCSP BO-2
LUKOIL BO-6, BO-7
Gazprom Neft-3, BO-5 and BO-6
Bashneft-3
CBM BO-4