Bloomberg News

Russian Bonds Rise to Record, Stocks Climb on Oil, Debt Sale

April 14, 2010

Russian bonds climbed to a record and stocks rose to the highest since 2008 as commodity prices advanced and the government met investors ahead of its first Eurobond sale since 1998, boosting sentiment for equities.

The yield on Russia’s 7.5 percent dollar bonds due 2030 fell 9 basis points to an all-time low of 4.829 percent. OAO Gazprom, the world’s biggest gas producer, gained 4 percent, helping push the 30-stock Micex (INDEXCF) Index up 1.8 percent to 1,526.61 in Moscow, its highest close since July 24 2008.

Crude oil, Russia’s key export earner, snapped five days of declines as a weaker dollar made commodities a more attractive alternative investment. Government officials including Deputy Finance Minister Dmitry Pankin are meeting with investors in London and Singapore today as Russia returns to international capital markets for the first time since defaulting on $40 billion of domestic debt in 1998.

“There is lots of interest surrounding the Eurobond issuance,” said Luis Saenz, a London-based director of international sales at brokerage Otkritie Securities Ltd., in e- mailed comments. “The risk of default by Russia is so remote, which is a boon for equities.”

Yields have fallen from 12 percent in October 2008 as oil prices rebounded above $80 a barrel, spurring the economy’s recovery from its worst slump since the collapse of the Soviet Union in 1991. Crude oil climbed as much as $1 to $85.05 per barrel in New York.

Nickel rose 1.4 percent to $25,850 a ton, after touching $25,990, the highest intraday price since May 21, 2008. Aluminum for three-month delivery rose 0.7 percent to $2,453 a ton after reaching $2,462, the strongest intraday price since Sept. 29, 2008.

The Russian currency added 0.3 percent to 28.9650 per dollar in Moscow trading, the highest closing level since Nov. 25. It gained 0.1 percent to 39.5000 per euro.

Investors pared bets that the ruble will weaken, with non- deliverable forwards showing the currency at 29.21 per dollar in three months compared with an NDF of 29.28 on April 13. The contracts are a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a particular level in the future.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

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


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