OFZ notes due February 2027 advanced for a second day, cutting the yield six basis points to 7.17 percent as of 7 p.m. in Moscow, reducing the increase this month to 13 basis points, data compiled by Bloomberg show. The ruble strengthened 0.1 percent against Bank Rossii’s dollar-euro basket to 34.8132.
Brent oil added 0.4 percent to $112.28 a barrel in London, advancing for the first time in three days. Crude and natural gas contribute about 50 percent of Russia’s state revenue. Russia’s ruble bonds fell this month as concern Europe’s debt crisis will worsen curbed investor appetite for riskier assets.
“If the flight from risky assets on overseas markets accelerates, we might see a prolonged correction,” Rosbank (ROSB) analysts lead by Vladimir Kolychev said in an e-mailed note.
The ruble weakened less than 0.1 percent against the dollar, taking its decline in February to 1.7 percent, the first monthly drop since October.
Euroclear Bank SA, the world’s largest bond settlement system, started over-the-counter operations with Russian government debt on Feb. 7 as the country opens the local market to foreigners. Clearstream International SA started custody and settlement services with OFZs today, the company said in a statement. It plans to offer delivery-versus-payment transactions in the spring and settlement for municipal and corporate bonds in the coming months.
An improvement in the global market may spur foreign investors’ interest toward local debt, according to BCS Financial Group.
“Speculative investments into seven-year and longer- maturity OFZs may be attractive again in the coming days,” Dmitry Dorofeev, a fixed-income strategist at BCS in Moscow, said by e-mail.
The Finance Ministry replaced a sale of 15-year ruble bonds with five-year debt on Feb. 26, citing “market conditions.” The ministry sold 50 percent of the five-year notes at the top of its yield guidance yesterday.
If the market conditions don’t change dramatically, the government may have to change its March schedule of auctions, Sberbank Investment Research analysts led by Alexander Kudrin said in an e-mailed note today.
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