CEE Bonds

Suddenly, Russia is suffering. In the last few days, with the oil price collapsing and a collapse in the rouble exchange rate, many in the West have started to suggest that it is time to rethink sanctions.

The rouble crisis hurt Russian corporates hard this week, but several companies took an even bigger hit because of their exposure to sinking commodity prices. While immediate repayment risks remain fairly benign for most, a deterioration of oil prices or the rouble could lead to covenant breaches.

The Russian economic crisis this week boosted participation in a tender offer for Evraz's 2015 bond. Investors accounting for $278m of Evraz's $576.7m 2015 notes agreed to a company buyback of the note at just over par.

Agroton Public, the Ukraine based agricultural company, has further delayed interest payments on its $50m notes due 2019 after bondholders voted in favour of the extraordinary resolution on Monday. The company’s operations have been severely impacted by the fighting in eastern Ukraine and analysts say its financial outlook is dire.

The beating that Russia’s markets took this week wasn’t on the same scale as the 1998 crisis but it was nevertheless shocking even for veterans of the earlier collapse, who were left slack-jawed at the free-fall of the rouble on Tuesday, writes Francesca Young. Even after the authorities got their act together and produced a package of stabilising measures and interventions on Wednesday, investors are now acutely aware of the heightened risk of defaults next year as weakness cascades through the economy.

Russian Standard Bank is continuing its debt management programme and surprised analysts with an early buyback of its 2017s on Monday.

The Russian economic crisis this week boosted participation in a tender offer for Evraz's 2015 bond. Investors accounting for $278m of Evraz's $576.7m 2015 notes agreed to a company buyback of the note at just over par.

Russian authorities are mulling forcing international rating agencies to continue rating all Russian entities, including borrowers subject to US and EU sanctions.

Some investment grade corporate bonds and credit default swap spreads have been rocked in the past weeks by the collapse in the Russian currency and political instability in Greece, but investment grade oil companies’ bonds are holding up relatively well.

Tuesday was the messiest day in Russian bond, equity and currency trading since the 1990s. But analysts and investors have come out of the storm on Wednesday saying that while risks exist and have increased, they are only moderately worried about Russian defaults next year.

Gold producer Nordgold has completed a $50m buyback of its 2018 Eurobonds, a move that analysts said sends a positive signal in to the market.

In a bid to support the weakened rouble, the Central Bank of Russia surprised the market on Monday night, hiking its main policy rate by 650bp to 17%. But the move has failed and has only served to demonstrate that even Russia’s hardiest investors have finally given up.