Russia

Panic selling has hit the Russia bond complex with investors dumping securities as they race to reduce their exposure to the country for fear of further sanctions.

The sell-off in Russian bonds is battering emerging markets investors, who are seeing the biggest spread widening since sanctions were first imposed on the country in 2014. Not only have the bonds of freshly sanctioned Rusal tanked but other Russian companies are selling off as investors fear they may be next, and the rot is starting to spread to the wider central and eastern Europe region as well.

The Eurasian Development Bank has embarked on a roadshow for a three to five year tenge denominated Eurobond.

Loans bankers are struggling to digest the implications of the new round of US sanctions on Russian oligarchs and companies, announced by the Treasury on Friday.

Equity investor sentiment on Russia has been upended in the space of a weekend after the shock release from the US Treasury on Friday imposing a fresh set of sanctions on Russia which has torpedoed the fortunes of aluminium producer EN+ and its owner Oleg Deripaska.

Shares in EN+ Group, the Russian power and metals company controlled by Oleg Deripaska, sold off 20% on Friday afternoon after the company was named on a detailed new sanctions list by the US government.

Three new Russian equity capital markets deals were launched this week, with bankers confident that European equity investors are comfortable enough to buy Russian risk despite diplomatic tensions between the country and the West growing more hostile.

Cherkizovo Group, Russia’s largest meat producer, has launched a $300m-plus secondary public offering on the Moscow Exchange to boost liquidity in its stock and raise funds for acquisitions and debt repayment.

Russian borrowers seem to have no trouble accessing capital markets, despite sanctions and international condemnation for the Russian government's alleged poisoning of the spy, Sergei Skripal, in the UK. But that shouldn’t surprise anyone. Despite the lip service paid to the idea of responsible investment, most investors are not so choosy.

Russia's State Transport Leasing Company (STLC) could return to the dollar market bond as early as this week, according to bankers on the deal.

Russian gold miner Nordgold and coal company Siberian Coal Energy Co (Suek) signed syndicated loans in the week leading up to Vladimir Putin’s victory in the Russian general elections.

Russia’s new bond may well be an act of defiance from the government, but it was also a savvy move in the capital markets as pressure on the country increases. Russia must have been keen to show that it did not need to alter course for funding in the face of allegations that it has poisoned ex-spy Sergei Skripal and his daughter in the UK. But financially it was also a sensible move that helps to fund the country in the face of an escalation of the situation.