16.10.2015

Western investors buy Russian bonds

For the first time since May funds investing in Russian bonds have recorded inflows, Gazprombank analysts wrote, citing data from EPFR Global. The influx to Russian bonds was $ 19 million from 8 to 14 October.

"First and foremost the influx happened due to the placement of "Norilsk Nickel" and "Gazprom" Eurobonds, whose securities were bought by foreigners. But not all the funds give reports to EPFR, so the actual inflow could be higher", - says Alexei Dyomkin from Gazprombank.

Last week two large companies at once came to the bond market: "Norilsk Nickel" issued seven-year Eurobonds for $ 1 billion under 6.625%, "Gazprom" - three-year Eurobonds for 1 billion euro under 4.625%. In both cases, the demand for the securities exceeded supply several-foldly and the companies lowered benchmark yield several times.

This is also evidenced by FLB placement tied to this week’s inflation: the Ministry of Finance raised 20.222 billion rubles with 5-fold demand on Wednesday. The weighted average price was 95.6533% of face value, the real average yield - 3.27% per annum. In addition, the largest international funds - Blackrock and the largest US pension fund Calpers reported about an increase of their share in Russian debt securities. 

Calpers, managing $ 295 billion, has invested in FLB about $ 250 million (about 5% of the international investment portfolio in debt instruments), said Mike Rosborough, a senior portfolio manager of the fund, in an interview to Bloomberg. According to him, the fund had begun to form a position on Russian sovereign bonds about two months ago and also owns the Russian sovereign Eurobonds and FLB bonds tied to inflation. The fund applied for the acquisition of inflation bonds at an auction on Wednesday, but did not get them, as cut-off price had been set at a lower level.

BlackRock left Russian bonds in the middle of 2014 because of the sanctions. "Then we realized that the sanctions would never reach the level that would threaten the investments and we came back," - said Pablo Gordberg, portfolio manager at BlackRock emerging markets. He didn't disclose the amount of investments. On Friday, FLB yields maturing in 2028 fell to the lowest since November - 10.1%.

From October 8 to October 14 funds investing in Russian stocks have also recorded inflow - $ 34 million. The record inflow since April was in the first week of October - $ 100.5 million.



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