Debt Markets Today - October 3, 2019

CIS EUROBOND MARKETThe markets witnessed a classic flight to quality yesterday, with benchmark yields dropping sharply and credit spreads - including those of high-quality EM issuers - widening. The Russia 26, 42 and 47 closed 0.2-0.4 pp lower, while their spreads over US Treasuries expanded by 3-11 bps. The Russia 29 closed down 0.1 pp at 106.8% (YTM 3.5%, Z-spread 205 bps).GOVERNMENT DEBTThe Finance Ministry yesterday placed R21.1 bln in the 11y OFZ 26228 (April 2030, 7.65%) at auction, without having set a limit beforehand, amid bids totaling R45 bln. It sold R15 bln of the issue to a single buyer at the secondary market rate of 7.10% and the remaining R6.1 bln via a noncompetitive bidding process. The most actively traded issues yesterday were those maturing in 2026-29.STORIES> Prices flat in last week of September; y-o-y inflation likely down to 4%> GDP growth in 2Q19driven by household consumption, investment > October Ruble/FX Flows: Exporters' high FX offer to strongly back ruble> EM corporate Eurobond issuance picks up in September> VEON places new dollar Eurobonds at 4%> Ukrainian Finance Ministry cuts borrowing in the local market