Investors wary of headlines from Russia, Ukraine; Sino-Ocean plans Monday marketing trip

By Christine Van Dusen

Atlanta, July 18 – Bonds from Russia continued to suffer in trading on Friday amid sanctions against some of its banks and concerns about who downed a Malaysian Airlines flight over Ukraine.

“There is a high likelihood of an unprecedented increase in sanctions, or at least the threat of, that would have the potential to cripple Russian bond markets,” a London-based analyst said. “For now, there is a high likelihood of a ceasefire while the crash is investigated.”

The latter news led to a small rally in some emerging markets bonds on Friday morning, she said.

“Most investors are awaiting further developments,” she said. “New issues have taken a back seat this week, given the events.”

Still, some of the new bonds did get attention in the secondary market. Turkey-based Alternatifbank AS’ new 3 1/8% five-year notes that priced at 99.477 traded relatively flat on Friday.

Taking a closer look at Russia, bonds from banks were about 72 bps wider after sanctions were announced for such companies as Gazprombank and Vnesheconombank, the analyst said.

“We don’t think the companies will face major pressure as a result,” she said. “But the potential for a further escalation is the clear focus now.”

Corporates also suffered, with bonds widening an average of 47 bps.

China’s Sino-Ocean Land Holdings Ltd. will set out on Monday for a roadshow to market a dollar-denominated issue of notes, a market source said.

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