Norvik Research 23.03.2017

23/03/2017 21:33

Global developments

Global stocks are rising moderately as investors wait for a vote on American healthcare. Tomorrow there will be a vote in Congress on Republican healthcare bill. This vote is seen as the first test of Trump’s ability to pursue his agenda and in case of a success, reflation trade will likely resume. S&P 500 futures are 0.1% higher; Eurostoxx 600 is 0.2% up. The dollar DXY index is slightly up. US 10Y treasury yields are up 1 bp at 2.41% falling 6 bp from the start of the week.

Oil prices declined on a built up in crude oil stockpiles. Inventories increased by 5.0 mn bbl (higher than consensus forecast of a 2.8 mn bbl rise). Brent prices are 0.4% lower at $50.5/bbl.

Russia and CIS area developments and market colour

The rouble is 0.4% stronger today at 57.5 versus USD. OFZ yields are 2-7 bps wider today. Russia’s and Kazakhstan’s longer term sovereign yields are 1-2 bps and 3-5 bps tighter today.

Corporate news

Putin proposed to nominate Central bank Governor Nabiullina for a new term. Nabiullina has held an office since 2013 with her term expiring in June. The news means that relatively tight monetary policy will be retained.

Gazprom has announced that it will hold a road show of sterling Eurobonds on March 27. The company plans to issue a medium term debt. Earlier in March Gazprom has placed 10Y Eurobonds with YTM at 4.95%.

Brazil’s energy giant, Petrobras, announced financial results for 4Q 2016. The results are improved compared to 4Q 2015 and the previous quarter. In 2015, the news broke that Petrobras was involved in the biggest corruption scandal, and now the company is actively restructuring the business and selling assets. During the last two years assets worth $13.6 billion were sold, and it is planned to sell $21 billion of assets until 2018.

Despite sales staying constant at around 70.4 billion reais, net income reached 2.51 billion reais ($762.8 million) in 4Q 2016. During the same period last year, the company reported a record loss of 36.94 billion reais ($9.6 billion). The loss for 2016 stood at 14.82 billion reais falling 57.4% YoY. It has to be stressed that EBITDA substantially rose 2.5 times YoY to 65.65 billion reais ($18.95 billion). Net debt declined 20% to 314 billion reais ($96.42 billion) last year. As a result, Net debt/EBITDA during the year decreased from 14.96% to 4.78%.

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