Russia gets rate hike, CDS widen; Turkey, Hungary, Ukraine bonds suffer; Kaisa curve drops

By Christine Van Dusen

Atlanta, Dec. 16 – Emerging markets investors were primarily focused on Russia on Tuesday morning, following a surprising rate hike from the Central Bank, which pushed credit default swaps spreads wider.

Russian CDS were trading at 585 basis points during the early session, a London-based analyst said.

“Cash sovereign bonds were initially tighter on the stronger ruble but are now wider once again,” he said. “Russia’s 2030s are 1 point lower from yesterday’s close.”

A lack of positive news about Russia’s conflict with Ukraine has put pressure on the latter sovereign’s bonds so far this week, said Svitlana Rusakova of Dragon Capital.

Much of the rest of the emerging markets universe saw limited trading but felt pressure on Monday, the analyst said, with Turkey’s credit default swaps spreads widening 20 bps.

“Central and emerging Europe are moving lower – Hungary sovereign bonds are 1 point lower, for example – affected by the general, very strong risk-off tone.”

From Asia, most credits were softer, with high-grade bonds opening 3 bps to 5 bps wider on Tuesday morning, a London-based trader said.

Property companies from China were seen trading down between 1/8 point and 3/8 point, he said.

China’s Kaisa Group Holdings Ltd. saw its curve drop 3 points after the company asked that trading of its stock be suspended ahead of an announcement of inside information.

© 2015 Prospect News.
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