Fixed Income. CIS Sovereign Pulse - April 10, 2018

Russian assets are in the spotlight after the US added a Russian entity with internationally tradable debt and equity to the SDN list, as well as following an escalation in Syrian tensions due to an alleged attack with the use of chemical weapons and as the US weighs more measures, citing the Skripal case.
Selling in Russian tradable assets yesterday and today has soured investors towards the CIS region as an asset class. We see entities with greater exposure to Russia, such as Belarus and Armenia, at higher risk. We have tactically amended our view on the region's sovereigns accordingly, but want the dust to settle before considering revising our top picks (see the bond tables).
Otherwise, the region has seen several important developments. Armenia has formally moved to a parliamentary system of government. Tajik-Uzbek relations are showing further signs of normalization after Dushanbe resumed exports of electricity to Uzbekistan, while Tashkent has resumed exporting gas to Tajikistan. Kazakhstan has stuck to a conservative fiscal policy in its amended 2018 budget. Elsewhere, S&P has affirmed its credit rating for Belarus and Southern Gas Corridor has provided an extensive update on construction and financing.