Russian Bonds Retreat as Oil Price Drops; Ruble Steady to Dollar

Russia’s ruble-denominated bonds fell as oil, the country’s chief export earner, declined in New York. The ruble was little changed against the dollar and euro.

The yield on 119 billion rubles ($4 billion) of OFZs due 2021 rose three basis points, or 0.03 percentage point, to 7.97 percent. The Russian currency was steady at 29.4925 against the dollar and 38.717 versus the euro by the close in Moscow.

Crude futures sank 1.6 percent to $102.60 per barrel in New York after a report showed U.S. supplies rose twice as much as expected last week, signaling weaker demand for the commodity. Oil and gas together contribute about 17 percent of Russia’s gross domestic product and 50 percent of state revenue, according to government estimates.

Investors increased bets on the currency weakening, with non-deliverable forwards showing the ruble at 29.9243 per dollar in three months, compared with 29.888 per dollar yesterday.

The yield on Russian dollar-denominated debt due 2015 slipped 11 basis points to 2.08 percent. Similar-maturity Eurobonds issued by OAO Sberbank, Russia’s largest lender, yielded nine basis points less than yesterday at 3.611 percent, while the yield on 2015 notes from state gas monopoly OAO Gazprom declined four basis points to 3.447 percent.

The cost of protecting Russian debt against non-payment for five years using credit-default swaps rose two basis points to 198 basis points, down from last year’s peak of 338 on Oct. 4, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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