Russia bonds

Russia’s 10-year bond yield has climbed for the 10th consecutive day to a new five-year high of 12.4 per cent as investors continue to exit the country’s financial markets, fast FT reports.

The rouble regained its footing somewhat last week, but only thanks to central bank intervention. It is today once again the world’s worst performing major currency, falling 1.4 per cent to 53.62 per US dollar (see chart below). Read more

Two central banks surprised the world last week with unexpected hikes in interest rates in the face of panicky financial markets. Raising rates a startling 150 basis points, the Central Bank of Russia was reacting sharply to yet another week of runs on the rouble. (It fell further this week nonetheless.)

The other, the Central Bank of Brazil, increased the cost of borrowing by a more modest 25 basis points. It seemed to be attempting to re-establish its independence credentials after the previous weekend’s presidential elections and subsequent worries that economic policy would tend towards the populist and the inflationary.

Yet just as with the advanced economies’ central banks – the Bank of Japan ramping up quantitative easing just as the Fed withdraws – monetary policy has diverged rather than unified in the big emerging economies. Read more

By Vladimir Kolychev, VTB Capital

Russian President Vladimir Putin announced this month that Russia should aim to sell its oil and gas for roubles globally, because “the dollar monopoly in energy trade was damaging Russia’s economy”.

This was the clearest indication yet that Russia is serious about its plan to shift away from using the US dollar. Western sanctions against Russia have accelerated this process and encouraged Russia’s close economic alliance with China. Some may question this move but for Russia, a shift away from the dollar makes perfect sense. Read more

Russia is worried about the level of foreigners owning its debt, it seems. According to Bloomberg, the head of the central bank’s financial stability department, Vladimir Chistyukhin, told reporters “We don’t consider the situation to be critical at this point… At the same time, we do see potential risks.”

Foreign investors at the start of July owned 30 per cent of outstanding debt – around 930bn rubles. That’s up from 7 per cent a year ago, and 21 per cent at the start of February. Which prompts the questions – should the bank worry? And what has sparked the increase?

To which the answers are: “No”, and “the central bank”. Read more

Euroclear on Thursday finally started the long-awaited direct settlement of Russian rouble-denominated government bonds.

The launch seemed to go smoothly, though there was no surge in prices or volumes to mark the event. With investors having had months to take positions in anticipation of the happy day, they had little reason to change their views. Read more

Last week’s $3bn Rosneft eurobond caps a strong year for Russian corporates which have so far raised $14.8bn from the international debt markets – well up on $12.1bn for the whole of last year and approaching 2007′s record $18.1bn, according to Dealogic, the research company.

The success of Russia’s corporate giants in attracting investors at ever-lower yields opens the way for second- and third-tier companies to tap the markets next year – as long as international investors remain flush with cheap money. Read more

Life for international bond investors in Russia is expected to get a lot easier from January, when newly-created links between the Moscow market and European-wide settlement and clearing systems are finally switched on.

Russia’s Central Securities Depository will next month start opening client accounts with direct access to Euroclear and Clearstream, the west European-based clearing networks. Officials at Micex, the Russian financial exchange, say the accounts will become fully operational for bond investors at the beginning of 2013. Read more

By Ben Aris of business new europe

Russia’s Economy Ministry announced it would offer Rbs1.5tn ($46bn) worth of bonds to finance infrastructure projects this week that has investors salivating at the prospect.

Russia has massively ramped up investments into its crumbling infrastructure in recent years as part of a grand plan to invest at least Rbs1tn into modernising the country. Read more