Debt Markets Today - April 26, 2021

CIS EUROBOND MARKETOn Friday, in the absence of new triggers, Russian sovereign Eurobonds showed very restrained dynamics, and the focus was the Russian corporate sector. Leading the day were Gazprom issues, in particular the bonds maturing in 2034 and 2037, whose spreads to the sovereign curve had previously widened considerably. On the day, quotes rose 2.6-2.8 pp. Banking sector bonds also outperformed. The Sovcombank perpetual issue added 1.2 pp, the subordinated Sovcombank 30 0.9 pp and the subordinated Alfa Bank 31 0.8 pp. Only the GeoPro 24 closed in the red again, losing 0.6 pp.GOVERNMENT DEBTA highly volatile day was observed in the OFZ market again on Friday. Quotes were supported at the open by headlines about a de-escalation in the geopolitical situation, with yields falling 4-5 bps. However, yields later shot up 20-25 bps in short issues and 10-15 bps in intermediate and long issues, driven in part by the CBR rate decision (in particular, the forecast for the average key rate in 2021 implied hikes to 6.5% by year end; see our review below). Later on, further benign geopolitical headlines and CBR Governor Elvira Nabiullina's press conference contributed to a slight pullback in OFZ yields - all the way back to flat for the day at the long end. Nevertheless, foreign investors continued to cut their positions in OFZs. Turnover amounted to R50 bln.STORIES> CBR review: Policy normalization accelerates> S&P downgrades TMK's rating from BB- to B+, outlook negative