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Norvik Research 09.02.2017

09/02/2017 18:56

Global developments

Eurozone government bond yields tightened further today, while the rally in US treasuries came to a halt. Yields on 10-year French and Italian bonds declined by 4 and 6 bps today to 0.97% and 2.18% after falls of 10bps and 12bps yesterday, respectively. 10-year Bund yields are down 1.5bps at 0.30%.10-year UST yields are up 2 bps at 2.36%. The dollar index is up 0.1% today. Most equity markets are up today with S&P 500 futures marginally higher. EuroStoxx 600 is up 0.2%, having pared losses late yesterday. Gold prices are marginally higher alongside the Bloomberg commodity index.

Oil prices are higher today, with Brent rising 1.2% today to $55.8/bbl. US crude inventories rose by 13.8 mn bbl against a 14.2 mn bbl API estimate.

Russia and CIS area developments and market colour

CBR Governor Nabiullina told local bankers that “moderately tight” monetary policy will continue and that scope for rapid disinflation is highest in the second half of this year. She said that Minfin’s FX operations should not be seen as interventions, have no nominal rouble targets and will be neutral from the standpoint of rouble liquidity. The governor observed that the banks’ shift to a liquidity surplus was “unstable”.

The rouble is 0.8% stronger today at 58.7 against the dollar. OFZ yields are 1-3 bps tighter today following yesterday’s mixed performance in the wake of weak 2022 bond auction (when only RUB 15bn of RUB 25bn were placed at 8.25%). Russia’s and Kazakhstan’s longer term sovereign bonds yields are flat. Ukraine sovereign yields are 1-2 bps wider.

Corporate news

Severstal will tomorrow begin investor meetings ahead of a planned 5-year USD Eurobond issue. The company in the past expressed interest in buying back part of its forthcoming Eurobond maturities.

Nordgold confirmed intention to delist from the London Stock Exchange. Nordgold’s free float is currently below 10%, versus the 25% LSE requirement. The company will keep paying dividends and publish financial results and may return to a public listing in case of large future projects.

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