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Norvik Research 01.06.2017

01/06/2017 16:30

Global developments

Market sentiment is positive amid favourable employment data before publication of change in nonfarm payrolls data tomorrow. ADP employment change in May came out at 253K against consensus of 180K. S&P 500 futures are slightly higher. Eurostoxx 600 is up 0.4%. The dollar index is 0.3% higher. US 10Y Treasury yields are 3 bps higher at 2.23%.

Positive inventories data supported oil prices. American Petroleum Institute reported that crude oil inventories declined 8.7 mn bbl in the previous week. Brent prices are marginally higher today at $50.6/bbl after falling 3.0% yesterday.

Russia and CIS area developments and market colour

Weekly inflation for the week ending 29 May increased to 0.1% WoW from 0.0% WoW in the previous week. In yearly terms, according to our estimates, inflation rose to 4.1% YoY from 4.0% YoY in the previous week. Nevertheless, we are still expecting a 25-50 bps key rate cut by CBR on 16 June.

Russia Markit manufacturing PMI in May came out at 52.4 stronger that consensus-forecast of 50.8. Expansion was driven by an increase in orders in the domestic market.

Corporate news

VimpelCom Holdings B.V. (owned by Veon Ltd.) announced cash tender offer for notes with maturities in 2018, 2021, and 2022. Offer expires on June 27, with early bird premiums applicable until June 12. The company plans to purchase all three notes with $2.43 bn volume outstanding.

In addition, the company announced offering of new senior notes. Since May 31, Vimpelcom Holdings B.V. will hold meetings with investors from Europe and the US. Depending on the results of these meetings, a new offering of US dollar Eurobonds will be announced.

Rating agency S&P affirmed long-term corporate rating of VEON Ltd. at “BB” with a stable outlook. The agency also rated the proposed offering of senior notes at “BB”.

Among other news, today Norilsk Nickel is offering $500 mn Eurobond with maturity in 2022. IPT is in the 4.125% area.

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