Fixed Income Analysis /
Russia

Alfa Fixed Income Weekly: Ruble curve closed last week in positive territory

  • After 8 weeks of upward movement the ruble curve closed last week in a positive zone (with yields declining)

  • Weekly inflation decelerated for the second week in a row,which may be the first signs of reverse of the inflation trend

  • On the secondary bond market activity was high due to the traditionally active autumn season

Elizaveta Naumova
Elizaveta Naumova

Senior Fixed Income Analyst

Alfa
16 November 2021
Published by

After 8 weeks of upward movement the ruble curve closed last week in a positive zone (with yields declining) with the highest move (20-30 bp) at the middle and far ends of the curve, while the short end of the curve lost 15 bp. As a result last Friday OFZ-26223 (2/24) closed at 8.32%, OFZ-26229 (11/25) closed at 8.13%, OFZ-26239 (07/31) closed at 7.97%, and OFZ-26230 (03/39) closed at 8.07%. Growing optimism was provoked by weekly inflation data, published on Wednesday, which showed an acceleration in price growth just at 0.09% w/w versus +0.21% a week earlier. Part of the drop, however, was provoked by non-working days from October 30 to November 7, however weekly inflation decelerated for the second week in a row, which may be the first signs of reverse of the inflation trend. Last Wednesday the Minfin placed two classical issues – OFZ-FI 26239 (07/31) and OFZ-FI 26240 (07/36) for a total of RUB40 bn; during both auctions the ministry offered equal volumes (RUB 20 bn). Demand during the first auction was four-times higher than the offer, which allowed the Minfin to place the issue without any premium to the secondary market with the cut-off price at 8.01%. Demand during the second auction also exceeded the offer, however the scale of exceedance was smaller – just 1.7x. The Minfin placed the issue at 8.03% per annum or with a small 4 bp premium to the secondary market.

On the secondary bond market activity was high due to the traditionally active autumn season. Segezha Group (Expert: ruA+) attracted a15-year issue worth RUB10bn with a put option in 3 years at 9.85% per annum. Investors are also focused on sub-federal issue of Ulianovskaya oblast (Expert: ruBBB+) for 5 years totaling RUB 3 bn at 9.55% per annum. In the second half of November we expect debut issues from Binnofarm Group (Expert: ruA) for 15 years with a put option in 2 years, GlobalTrans (Expert: ruAA, Moody’s: Ba2, Fitch: BB+) for RUB7.5 bn for 5 years, and Pioneer (Expert: ruA-) for not less than RUB5 bn with a date-to-maturity in 4 years. Issuers continue to borrow on the Eurobond market – PIK Group (Expert: ruA+) placed a 5-year Eurobonds for $525 mln at 5.625% per annum. Alfa-Bank is preparing a perpetual Eurobonds issue for not less than $300 mn with a target yield range of 6-6.25% per annum.