Debt Markets Today - June 30, 2020

CIS EUROBOND MARKETAfter a long period of subdued trading activity, the Russian sovereign Eurobond market underwent a correction yesterday, as fears over the further spread of Covid-19 predominated for most of the day in global markets. The Russia 47 shed 2.3 pp, while the Russia 42 posted a loss of 1.2 pp.GOVERNMENT DEBTToday, the Finance Ministry will auction issues in the middle of the curve: the 5y nominal OFZ 26234 (July 2025) with a limit of R50 bln set and the floating-rate OFZ 24021 (April 2024) without a limit. Although the ministry has chosen fairly "defensive" issues, the decision sparked a sharp rise in yields in the belly yesterday (by 9 bps in the 5y and neighboring issues and a 1-3 bps increase at the long end). The recent correction following the CBR's 100 bp rate cut was precipitated by the weak demand at CBR repo auctions and uncertainty over the Finance Ministry's borrowing plans for the rest of the year. Given yesterday's market reaction, we think demand is likely to be low at today's auctions.STORIES> Sibur markets new dollar Eurobond