Debt Markets Today - December 5, 2018

CIS EUROBOND MARKETFollowing the sharp decline in US Treasury yields late Monday evening, Russian sovereign Eurobonds gapped up 0.7-0.8 pp at the open yesterday. However, sellers began to take over after the US markets opened, and most issues returned to where they ended Monday's session. The sole exception was the Russia 28, which finished 0.3 pp higher at 157.9% (YTM 5.0%, Z-spread 204 bps).GOVERNMENT DEBTSelling predominated in the OFZ market in the lead-up to the auction announcement yesterday, with most of the pressure coming from local investors. Yields in the middle of the curve rose 3 bps, while yields further out rose 1 2 bps. After it was announced that today's auction would feature the 5y OFZ 26223 (R10 bln) and 10y OFZ 26224 (R15 bln), the selling at the long end intensified, and issues 8y and longer yielded 2-3 bps higher at the close. Trading volumes were relatively weak, totaling just R10 bln, and were concentrated at the long end.STORIES> Fiscal rule limits upside for ruble and OFZs in 2019> Prices up 0.9% m-o-m in November in Kazakhstan> National Bank of Kazakhstan keeps base policy rate at 9.25%