Russian Bonds Rise on Oil Gains as Short-Dated Auction Sells Out

Russian bonds climbed, pushing yields lower for the first time in three days, as oil recovered from a one-month low and the government sold all the short-maturity bonds it offered at an auction.

The ruble reversed earlier declines as Brent crude rallied 0.8 percent to $56.83 a barrel, taking its advance since reaching a six-year low on Jan. 13 to 25 percent. The Finance Ministry sold 10 billion rubles ($161 million) of 2017 floating-rate debt tendered at an auction Wednesday after missing its target with a smaller offering of 10-year notes.

“Improved market sentiment is linked to the fact that oil has stopped falling after a big drop on Tuesday,” Dmitry Dudkin, the head of fixed-income research at UralSib Capital in Moscow, said by e-mail. “There’s a sense in the market that the Russian risk premium is contracting.”

Crude’s bounce has helped asset prices recover in the world’s biggest energy exporter. Russia has revived debt auctions after canceling 27 bond sales in 2014 amid tumbling oil prices and sanctions over the conflict in Ukraine. The Finance Ministry has so far placed about 80 billion rubles of bonds in 2015, or half its total debt sales last year.

The ruble gained 0.5 percent against the dollar to 62.2070 as of 5:59 p.m. in Moscow after sliding 3.3 percent yesterday, its steepest decline in a month. The yield on government five-year bonds fell 20 basis points to 13.48 percent. The dollar-denominated RTS Index of Russian stocks fell 0.3 percent after a 6.4 percent tumble Tuesday.

Russia’s currency is the best performer among emerging-market currencies since January, with a 12 percent gain, data compiled by Bloomberg show. Yields on five-year debt are down 1.39 percentage points.

The government issued 850 million rubles of the 5 billion rubles it offered of its debut floaters due in 2025 as it struggled to find buyers for longer maturities. It later sold all 10 billion rubles of floating-rate debt maturing December 2017.

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