Russian Corporate Bonds Paring Losses as Ukraine Tensions EaseJohn Glover
Bonds in euros and dollars issued by Russia’s largest companies are paring the biggest losses in at least eight months as concerns ease that the crisis in Ukraine will escalate.
Rosneft’s 4.199 percent notes climbed 1.2 cents on the dollar after plunging by more than 2 cents yesterday, according to Bloomberg generic prices. Gazprom’s 3.6 percent bonds sold last month gained 0.3 cent on the euro following a drop of 2 cents, while its 9.25 percent securities rose 0.3 cents on the dollar after falling by the most since June 20, the data show.
Putin ordered troops in northern and western Russia back to their bases after military exercises concluded on schedule, Interfax reported. While forces remain in the Crimea region, Putin said today he would send troops to Ukraine only in an extreme case and is not considering adding Crimea to Russia.
“We’re seeing that at least for now, the market appears less concerned over the situation in Ukraine,” said Joseph Faith, a strategist at Citigroup Inc. in London. “Issuance volumes have been low recently, there’s a lot of demand so in the absence of negative headlines bonds tend to grind tighter.”
The average extra yield investors demand to hold investment-grade bonds in euros instead of government debt is 117 basis points, five basis points from the lowest in more than six years, according to Bank of America Merrill Lynch index data. The spread for dollar notes is also holding near the narrowest since 2007, the data show.
In credit markets today, Nationwide Building Society is selling the first additional Tier 1 bonds in pounds, according to a person familiar with the sale. The Swindon, England-based housing lender’s 1 billion pounds ($1.7 billion) of undated securities will pay a coupon of 6.875 percent, the person said.
Praxair Inc., a U.S. industrial gas supplier, is issuing 600 million euros ($825 million) of six-year bonds, another person said. It will be the first euro-denominated sale from the Danbury, Connecticut-based company, according to data compiled by Bloomberg.
Propertize BV, the “bad bank” formed from the real estate arm of nationalized Dutch lender SNS Reaal NV, is marketing 1 billion euros of three-year floating-rate notes backed by the Dutch government, a person familiar with the matter said.