Drukāt |

Norvik Research 20.09.2016

20/09/2016 18:18

Global developments

The dollar and longer-dated US Treasuries are marginally stronger ahead of tomorrow’s BoJ and Fed policy decisions. The market-implied probability of a Fed hike tomorrow stands at 22%, from 34% at the start of September, even though at least two large market players have warned that bond markets are complacent about the risk of Fed action tomorrow. The dollar index is up 0.1%. The US 10y yields are 3 bps lower at 1.68%, 30-year are 4bps lower. Stock markets in Europe and S&P futures are higher today, after both CSI 300 and Nikkei 225 fell 0.2%. Bloomberg commodity index is 0.1% lower.

Oil prices are falling on concerns about a rising global glut. Oil output in Nigeria is reportedly recovering from the fields earlier affected by clashes. Brent prices are down 1.6% at $45.2/bbl. Crude inventories are projected to have increased by 3 mn bbl in the previous week.

Russia and CIS area developments and market colour

Russia’s consumer demand indicators for August came out weaker than expected, July data revised downwards. Real retail sales fell 5.1% YoY in August after a 5.2% YoY drop in July, revised from 5.0% drop (market consensus was for a 4.9% YoY decline). Real wages fell 1.0% YoY after contracting 1.3% in July (revised from a 0.6% YoY increase; market consensus was for an increase of 0.8% YoY). The improvement in real wages observed earlier this year is no longer evident in the revised series. The data also point to renewed weakness in real disposable incomes. Unemployment eased to 5.2% in August from 5.3% in July (it decreased marginally in seasonally-adjusted terms as well, on our estimates). Overall, industrial output remains the sole bright spot in recent data, while demand-side indicators disappointed.

The rouble weakened 0.4% today to 64.9 against the dollar. OFZ yields are rising 10-20 bp in the belly after widening 2-10 bp yesterday on the CBR’s hawkish stance. Russia and Kazakhstan longer term yields are flat today. Ukraine’s short-dated sovereign yields are 2-3 bp wider today, Ukraine 27 yield tightened 14 bps to 8.17%. Azerbaijan-24 and Belarus-18 are 2 and 1 bp tighter, Armenia-25 is flat.

Corporate news

Russian Railways announced a tender offer to buy back two Eurobond issues. The issues affected are $1.5 bn notes due 2017 and CHF 525 mn notes due 2018. The company will issue a new USD Eurobond to finance the buyback and may also issue RUB Eurobond depending on market situation. These plans indicate continuation of the pattern for Russian top-tier borrowers to tap the Eurobond market to refinance debts due 2017-2018. In our view, the key reason behind this decision is the expected near-term increase in US rates.

O1 Properties, a Russian property developer, will issue a 5-year Eurobond. The coupon guidance is for 8.5%; the size may exceed $300 mn.

For more information on the research, please click here.

Norvik Banka Research
+44 207 259 8854

This report is prepared by Norvik Banka UK Limited, of 46-48 Grosvenor Gardens, London, SW1W 0EB, United Kingdom (hereinafter referred to as the Company) as a marketing communication for information purposes only. Neither the information nor any opinion contained in this report (notwithstanding the source) is intended to be, or should be construed as an offer, a recommendation, an advice or an invitation to make an offer, to buy or sell any financial instrument. Information contained in this report constitutes neither investment nor tax advice and it does not take into account the specific investment objectives, risk appetite and financial situation of anyone who may receive this report. Investors should seek their own advice regarding the appropriateness of investing in any financial instrument discussed in this report and carefully evaluate the risks and eventual losses that are related to the investment services and its compliance with their investment goals.
Investors should note that any income derived from investments in financial instruments may fluctuate and that the price or value of securities and investments may rise or fall. Accordingly, investors may lose their investment or receive back less than originally invested. Past performance and income is not a guide to future performance and income. Foreign currency exchange rates may adversely affect the value, price or income of any security or related investment mentioned in this report. Investing in the Russian or CIS economies and securities involves a high degree of risk and requires appropriate knowledge and experience.
The information contained in this report have been obtained from such public sources what are believed to be reliable, but no representation or warranty is made by the Company with regard to accuracy. Therefore the information contained herein is subject to change without prior notice.
This report should not be viewed as the only source of information, and neither the Company, nor the companies within the NORVIK group and/or any affiliates or employees thereof accept any responsibility or liability whatsoever for any direct or indirect damage arising out of or in any way connected with the use of information contained herein, nor for its authenticity.
This report may not be distributed, copied, reproduced or changed without prior written consent from the Company. Further information, which for the avoidance of doubt cannot be treated as the recommendations and/or advice either, may be obtained from the Company upon request.
This report has not been prepared on the basis of the requirements of regulatory provisions promoting independence of investment research and is not subject to the prohibition from making transactions before disseminating investment research.
Norvik Banka Research is a Trading Name of Norvik Banka UK Ltd, which is Authorised and Regulated by the Financial Conduct Authority, FRN: 681329. Registered in England and Wales with number 08940522. Registered Office: 46/48 Grosvenor Gardens 1st Floor, London, SW1W 0EB.

The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful.

This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in; Security, archiving and compliance. To find out more Click Here.

Pēdējās ziņas