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Veles Capital - Daily bonds review - Nov 11, 2009.

Foreign market

US Treasuries

China is stronger than ever.

Good results of 10-year bonds inspired the market, which fears decline of interest in the treasurybonds against the background of the dropping dollar. Sum total demand exceeded the offer by 2.81times, which is slightly lower than it was by the end of the recent placement of similar notes. Howeverthat is a relatively high result in the current situation that was supported by healthy interest to theplacement on behalf of the American banks, which invest in the treasuries the excess liquidity.

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Still 30-year notes, auction on placement of which is scheduled Thursday, closed the day in negative price,which indicates remaining fears on the matters of the market ability to melt the offer of new noteswithout damage to the prices of the secondary market.It is a holiday today in the U.S. The debt market and banks will be closed, while the share market willbe operating in the normal mode. Informational vacuum, typical for such days, is greatly filled by China, which output this morning a set of statistic estimates (producers' prices index, retail selling, andindustrial production). The markets took the information on the industrial production growth in China upto the maximum level since spring of 2008 (+16.1%) most positively.

Asian and European exchangeindices grew by more than 1%. American futures are also trading in the positive zone. That mightslightly power up the pressure on treasuries quotes, though the situation might change till the end ofthe day.

Foreign market


Price growth on short end of the curve.

At the Eurobond market the positive dynamics was indicated. Sovereign issue Russia-30 upped inprice by 20 b.p. to the level of 112.8% of the nominal. The short-term corporate notes climbedfollowing it Co Gazprombank 2011, VTB 2010 (GBP), Ak Bars 2010, Transneft 2012, TMK 2011.

Domestic market

Corporate sector

Growing further.

On Tuesday the market of ruble bonds got more active. As the day before, FLB and the notes of thefirst echelon were the most purchased ones. In the first echelon the average growth of quotes formed20-30 b.p. The most volume of deals went on the issues of VTB-24, Mechel-4, RZD-10, VTB-4,MTS01.Positive open of the share market was a warrant of active trades and in the debt segment, while thedynamics of the currency market supports the growth of ruble assets quotes.

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Publication:Russian Banks and Brokers Reports
Date:Nov 11, 2009
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