CEE Bonds

Fears that the Russian Federation's €1bn bond issue would only find demand domestically seem to have been assuaged as a source close to the deal said well over half the deal was sold to international investors. That source also denied the deal was in any way designed to bait the West, and said its timing was simply a matter of wanting to get ahead of worsening market conditions.

A Russia euro-denominated bond has taken investors by surprise this week, as emerging markets issuers seem to be taking their last gasps in the bond market this year.

Russia is doing it again — for the second time this year it has picked yet another politically unpalatable week to print a sovereign bond. It seems to be sticking a middle finger up to the west as it rolls around in cash and shows off the access the country has to capital markets. But if that was the motivation behind this issue, it has not accomplished its goals.

The Federation of Russia is returning to the bond markets for the first time since a set of US sanctions in April sent the country’s bond trading into a tailspin. But despite books for the bond already being in excess of €1bn, several bankers away from the deal are describing it as a “political statement” rather than a well thought out trade, and are heavily criticising the timing and choice of euros for the note.

Kazakhstan Temir Zholy (KTZ), the Kazakh state-owned rail company, sold Sfr150m five year Swiss franc bonds on Tuesday, in choppy market conditions.

The seizure of three Ukrainian navy ships by Russia on Sunday has sparked civil unrest in Ukraine and driven the tension between the two countries to new heights, wreaking havoc on Ukraine’s capital markets.

In this round-up, China and the Philippines sign Memorandum of Understanding (MoU) for a new Panda issuance, survey finds that 64% of Chinese investors choose to invest domestically rather than overseas, and foreign firms are getting approvals to help China build a nationwide credit information monitoring system.

Belarus is working to issue its first sovereign Panda bond, GlobalRMB understands.

Russia’s O1 Properties has implemented another deadline extension on a consent solicitation on its $350m 2021 notes, with analysts reckoning that there still could be further requests for more time.

In this round-up, wealthy Chinese individual investors now have access to local government bonds, Russian and Chinese leaders in the financial industry are meeting to strengthen mutual market access, and northbound trading volume via Stock Connect reached Rmb8.77tn.

Rating: Baa3 (positive)/BBB-/BBB- (positive)

Naftogaz and Emirates National Bank of Dubai (ENBD) shelved plans for five year dollar benchmarks this week, thanks to a steep fall in the oil price and what bankers referred to as weak sentiment.