Bloomberg News

Russian Eurobond Yields Drop to Record Lows on Brent Crude Gain

July 16, 2012

Yields on Russia’s international debt dropped to the lowest levels on record as oil, the country’s main export, advanced. The ruble was little changed against the dollar and euro.

The country’s $3.5 billion of Eurobonds due 2020 rose for a fifth day, cutting the yield by 19 basis points, or 0.19 percentage point, to 3.157 percent, the lowest level on a closing basis since the notes were issued in April 2010 and the sharpest fall since June 6. The Russian currency gained less than 0.1 percent to 32.608 per dollar by the close in Moscow, extending last week’s 0.6 percent gain.

Brent crude jumped 0.8 percent to $103.19 per barrel, a fourth day of gains. Oil and gas together contribute about 50 percent of Russia’s state revenue, according to the government’s estimates.

“Risk appetite, boosted by cheap U.S. dollar funding costs” drove today’s fall in yields, Dmitry Trenin, chief fixed-income trader at Otkritie Financial Corp. in Moscow, said by e-mail.

Yields on U.S. Treasuries due May 2020 dropped four basis points to 1.008 percent, a record low on a closing basis.

The ruble was steady at 39.9115 per euro and 35.8946 against the central bank’s dollar-euro basket. Investors pared bets on the currency weakening, with non-deliverable forwards showing the ruble at 33.0936 per dollar in three months, compared with expectations of 33.1365 per dollar on July 13.

To contact the reporters on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net; 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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