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Increasing Uncertainty over Budget Cliff. Sell-Off and Flight to Quality Expected Today. Comments: VTB; FC Otkritie

21/12/2012 | UFS IC
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Global Markets and Macroeconomic News
• Yesterday global financial market closed with a positive bias. European and the US stock markets and emerging bond markets grew on positive US statistics.
• Voting on Boehner’s plan in the House of Representatives failed. Budget cliff uncertainty is increasing.
• Sell-off and flight to quality are expected today.

Bond Market
• Pre-New Year rally went on in the Eurobond market, with many bonds renewing all-time yield lows. The spread Russia-30-UST-10 narrowed to 76 b. p.
• Yesterday OFZ market was traded mixed amid decreased trading volumes.
• Corporate debt market did not posted marked dynamics either.

Money Market
• Yesterday money market situation was characterized by increased demand for the ruble due to the start of tax payment period.

Comments
• VTB Released Positive Financial Statements for 9 months 2012. Recommendation: Subordinated VTB-22
• FC Otkritie (-/-/-) is going to place Series 4 bonds worth 5 billion rubles on December 26. In our view, the offered guidances are aggressive and make the auction investment unattractive.

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