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UFS Daily Review: Flat trend prevails

December 3, 2012
Bond market: Eurobonds

Russian Eurobond market also posted low trading activity on Friday. The sovereign sector showed no common dynamics with Russia-30 down about 0.15% closing at 127.0% of the nominal. Meanwhile, Russia-42 settled up 0.2%.

Most corporate issues posted almost no price changes, except individual bonds. The leading gainer was our recommendation, the perpetual Eurobond of VTB that soared 0.9%. By now the price has reached 104.0% of the nominal, while the yield dipped to 8.8% per annum. Thus, the issue’s upside has been practically exhausted. Alfa-Bank’s Eurobonds outperformed in the banking sector.

Rosneft’s Eurobonds added 1.5% each in the secondary market. In effect, both issues are traded with a discount to Gazprom’s yield curve. We deem the issues already overestimated by the market and not attractive as a buy. It should be noted that the issues are already demonstrating a slight correction.
Today flat trend will prevail like on Friday, except in some bonds such as issues of EVRAZ and VTB.

Local bond market

Buying continued on Friday, though the average growth did not exceed 0.1%.
7-year 26208 added 0.15%; 9-year 26205 edged up 0.05%. 5-year 25080 dipped 0.2%.
Russia-18-OFZ-26204 has increased 1 b. p. to 74 b. p.

Ruble corporate debt market showed moderately negative price dynamics with the average decline of 0.03%.
Mechel BO-4 and Series 16 slipped 1% and 0.8% respectively under selling pressure. Besides, VEB-21 and AK BARS closed 0.7% and 0.5% down respectively. Vneshprombank BO-1 (+1.1%), Mechel-15 (+0.2%), Credit Europe Bank BO-1 (+0.2%) enjoyed gains.

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