Debt Markets Today - August 13, 2020

CIS EUROBOND MARKETRising US Treasury yields continued to pressure Russian sovereign Eurobond prices yesterday. At the long end of the curve, prices fell 0.8-1.0 pp, with the Russia 43 underperforming, slipping 1 pp to 148.3% (YTM 3.0%, Z-spread 209 bps). Meanwhile, the 10y Russia 29 edged 0.3 pp lower to close at 114.2% (YTM 2.0%, Z-spread 156 bps). The 5y Russia CDS narrowed 3 bps to 83 bps.GOVERNMENT DEBTOFZ yields rose 3-6 bps in the middle of the curve and 2 3 bps at the long end yesterday. This came amid a drop in the ruble. Trading was thin, however, and we doubt that such low volumes of selling in the OFZ market - meaning low volumes of rubles converted into FX - were able to trigger a decline in the local currency. It was likely the other way around: the weaker ruble spurred selling in OFZs. We will only be able to confirm this in two or three days when the NSD data on nonresident OFZ holdings is released. Trading volumes yesterday totaled R8.7 bln.STORIES> Budget deficit totals R1.5 trln over 7m20> Consumer spending retreats in week to August 9> Prices down 0.1% last week, the first price drop this year> Finance Ministry cancels OFZ auction for first time since April> Inflation in Ukraine stays at 2.4% y-o-y in July> National Bank of Belarus keeps refinancing rate at 7.75%