Save
A Pro-Russian separatist holds a destroyed weapon on a road in the village of...Read More
Traders driven weary by the ups and downs of Russia’s conflict with Ukraineare pulling out of the ruble bond market, sending volumes to a four-year low.
Secondary-market bond trading on the Moscow Exchange slid 34 percent in the first eight months of the year to 5.8 trillion rubles ($157 billion), the lowest level since 2010, according to data on the bourse’s website. The government’s ruble-denominated notes lost 14 percent in dollar-terms this year, the worst performance among 31 nations in the Bloomberg Emerging Market Local Sovereign Index, which gained 6.1 percent.
“Investors are very tired of the market behavior because they take a position and then there is one headline and a big move down,” Sergey Volkov, a fixed-income trader at Russian Standard Bank ZAO in Moscow, said by phone yesterday. “It has been a very hard market this year.”
The fighting in eastern Ukraine between government forces and pro-Russian separatists has sent the nation’s bonds tumbling as U.S. and European sanctions propel the economy toward a recession. The drop in volumes comes a year after foreign investors gained direct access to the market, stoking a 22 percent jump in turnover, as part of President Vladimir Putin’s plans to make Moscow a global financial hub.
Sales Slump
Bond sales by Russian issuers have tumbled as the crisis in Ukraine drove up borrowing costs, with domestic sales of debt plunging 61 percent to $14.3 billion in 2014 compared with the same period in 2013, data compiled by Bloomberg show.
The yield on the government’s local-currency bonds due in February 2027 jumped 1.61 percentage points this year as Putin’s annexation of Ukraine’s Crimea peninsula in March prompted the U.S. and European Union to impose sanctions on individuals and companies. Bonds also came under pressure as the central bank, seeking to shore up the ruble, increased its key policy ratethree times by a total of 250 basis points.
“The fluid market situation and the rise in interest rates during the first half of 2014 led to a drop in the volume of borrowing in the debt market,” the Moscow Exchange said in a statement yesterday. “As a result of that the volume of bond trading dropped.”
The collapse upended a market that last year saw volumes in domestic bonds, known as OFZs, reach a record 12.7 trillion rubles. Foreign investors were drawn by simplified settlement and tax procedures as Euroclear Bank SA and Clearstream International SA began exchange-based operations.
0 comments:
Post a Comment