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inflow amounting to RUB 233bn at par. The share of nonresidents at OFZ
auctions advanced to 37% in October, from the prior 19%.
The yield curve for Russian federal ruble bonds OFZ has recovered to
pre-sanction level in October 2019, while the share of foreign investors in
the OFZ market increased by 2.4 percentage point (pp) or by RUB233bn to
31.4%, Reuters reported on November 11 citing the report by the Central Bank
of Russia (CBR).
The share of foreign investors holding OFZ has reached its highest level since May 2018, and bounced back from last year’s retreat to 24.4% as the investors pulled out of OFZ following the April 2018 round of US sanctions.
The Russian Government Bond Index (RGBI) closed at the record-high of 150.0 as of November 9, gaining 16.0 since the beginning of the year, while the full yield RBGI (including coupons and reinvestment of coupons) reached 557 points.
Foreign investors are most active on the secondary OFZ market, and not on the Finance Ministry's auctions of the bonds, according to the CBR. The yields on the OFZ has moderated the most for securities with 5 to 15 year maturity, following the 125bp cut in the key interest rate by the regulator this year.
The issues from Central Europe were more subdued with a total of 6 issues worth collectively $2.2bn, less than half of the eight issues that raised a total of $5.9bn in the same month a year earlier and a similar amount that was raised in October 2017.
By contrast bond issues from the CIS were considerable more active this year than in the previous two years. The total of $4.5bn raise this October was double the $2.2bn raise a year earlier and five times more than the $876mn raise in October 2017.
Cumulatively issuers from the CIS have issued a total of $27.8bn over the first ten months of this year, which is already more than the $24bn that was raise in all of 2018, but well down on the $44.3bn raised in all of 2017 – a vintage year where the lion’s share of bonds were issued in the first half of 2017.
This year March and June were particularly strong months for bond issues, but September and October have proven to be equally strong accounting for 18.8% and 16.1% of all the issues YTD. March was the very strongest month accounting for just under a quarter (24.3%) of all the bonds issued in the CIS YTD.
From the non-Russian bonds on offer in October most came from Ukraine with leading metallurgical company Metinvest issuing a $500mn with a yield of 7.75% that matures in 2029 as part of its debt restructuring programme.
Next month’s round up will also include more large Ukrainian issues as its leading companies are taking advantage of the economic recovery and improving macroeconomic fundamentals that have improved sentiment to
Bond issuers from Eastern Europe were active in October with 18 bonds
issued worth a total of $4.5bn of which two thirds of the value and 14 out
of the 18 were Russian bonds, according to data provided by CBonds.
87 RUSSIA Country Report December 2019 www.intellinews.com
