Morning Commentary: Yandex contracts on swap amid escalating Russia-Ukraine tensions; CETV lower

By Rebecca Melvin

New York, July 21 – Escalating tensions in the aftermath of the crash of a Malaysia Airlines airliner, brought down in the Ukraine-Russia border conflict, has created sellers in a pair of convertibles with ties to that region, market players said early Monday.

Yandex NV’s 1.125% convertibles due 2018 fell on an outright basis and a dollar-neutral, or hedged, basis to 90.375 bid, 91.125 offered with the underlying shares at $29.66, a Connecticut-based trader said.

The bond was “in about a point on swap,” the trader said.

Shares of the Dutch-based internet company for Russia and internationally have dropped sharply since the plane crash Thursday and were down another $1.21, or 4%, to $29.52 early Monday.

Yandex priced $600 million of the bonds last December.

Central European Media Enterprises Ltd.’s 5% convertibles due 2015 were also a little lower, changing hands early Monday at 97.75, which was down from about 98 on Friday and down from about 98.5 on Wednesday, according to Trace data. There were no trades in the bond reported by Trace on Thursday.

Shares of the central and eastern European TV broadcaster have also dropped sharply since the crash and were down another 2 cents, or almost 1%, at $2.42 early Monday.

A New York-based trader said there was one big seller and three buyers in the CETV 5% convertibles on Friday.

“They’ve traded around 98 for months. They may yield more but the risk is still 98 points,” the trader said.

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