Fixed Income Analysis /
Russia

Alfa Fixed Income Weekly: The Russian debt market resumed its downward trend

  • Last week the Russian debt market resumed its downward trend after upward correction a week earlier

  • Apart from that, geopolitical tension also keeps pressuring the debt market

  • Last Wednesday the Minfin placed only one classical issue – OFZ-FI 26239 (07/31)

Elizaveta Naumova
Elizaveta Naumova

Senior Fixed Income Analyst

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Alfa
14 December 2021
Published byAlfa

Last week the Russian debt market resumed its downward trend after upward correction a week earlier: the RGBI index closed at 134.64 (-0.59 pp w/w) last Friday. The OFZ curve shifted upwards over the entire length of the curve with the highest movement (+11-12 bp) in the short (1-2 years) and middle (6-7) ends. The OFZ FI-25084 (10/23) closed at 8.58%, OFZ-FI 26229 (11/25) – at 8.62% and OFZ-FI 26228 (03/30 г) – at 8.52%. The curve is still in the inverted state in anticipation of the CBR meeting on December 17, during which the regulator “will consider a wide range of rate options”, according to the comments of the CBR deputy head A. Zabotkin. At that, Elvira Nabiullina stated that due to the most recent inflation figures, keeping the key rate at current levels or its 25 pb hike is highly unlikely at the December meeting – December inflation totaled 8.4%, reaching its peak since January 2016. Apart from that, geopolitical tension also keeps pressuring the debt market.

Last Wednesday the Minfin placed only one classical issue – OFZ-FI 26239 (07/31) for a total of RUB 30 bn. Demand was 1.8 times higher than the offer, which allowed the Minfin to place the entire volume with a small 2 bp premium to the secondary market with the cut off price at 8.6%.

On the primary bond market there were some interesting corporate placements. GC “Pioneer” (Expert: ruA-, АКРА: A-(RU)) placed its 4-years 001P-06 issue for RUB 3 bn at 11.75% per annum. Another developer, Brusnica. Construction and development (Expert: ruBBB+, АКРА: A-(RU)), attracted RUB4 bn for 3.5 years at 11.85% per annum. Alfa-Bank (Ba1/BBB-/BBB-) closed its bid book for 1.5 years 002Р-16 issue for RUB 5 bn at 9.55% per annum. On Friday IOC-Capital (Expert: ruA+, АКРА: A+(RU)), IOC holding company (Irkutsk oil company), gathered orders for the first in Russia adaptable bonds issue (the proceeds will be directed to one of the adaptation projects with an environmental effect) of 5-years 001Р-01 issue for RUB 5 bn at 10.25% per annum. Kaliningradskaya oblast (Expert: ruA-) announced its plans to enter the debt market with 7-years issue for RUB 2 bn in the second half of December.