Morning Commentary: Russian bonds tighten; Rosneft notes flat; EuroChem earnings eyed

By Christine Van Dusen

Atlanta, Aug. 14 – Corporate bonds from Russia started Thursday’s session tighter again, even amid reports that the sovereign’s aid convoy is heading toward a rebel-controlled area of the border with Ukraine.

“The convoy is unlikely to reach Ukraine before tomorrow, still providing time for a deal to potentially be reached,” a London-based analyst said.

Also from Russia, Moscow-based oil company OAO Rosneft asked the government for more than $40 billion to help manage sanctions.

“Reports suggest the National Wealth Fund would buy Rosneft bonds, which, if true, will alleviate concerns about Rosneft’s circa-$42 billion of debt maturing before 2018,” the analyst said.

Still, Rosneft’s bonds were mostly unchanged on Thursday morning.

Moscow-based fertilizer company EuroChem Global Investments Ltd. reported that second-quarter revenue climbed 3%, year over year, while earnings declined by 11%.

The company blamed the conflict in Ukraine, as well as disruptions of supply to North Africa and the Caribbean.

In response, EuroChem’s 2017s have continued to underperform, widening 162 bps on the month, a market source said.

That’s in line with Rosneft’s 2017s, he said, but underperforms potash producer Uralkali’s 2017s.

In deal-related news, market sources were whispering about a possible issue of Tier II notes from Turkey’s Turkiye Vakiflar Bankasi TAO (Vakifbank), which could come to the market after September.

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