First Gulf Bank prices bonds; Ukraine ceasefire fails; bailout talks in Greece fall apart

By Christine Van Dusen

Atlanta, Feb. 17 – Abu Dhabi’s First Gulf Bank PJSC sold notes on Tuesday while emerging markets bond spreads moved slightly wider as the ceasefire in Ukraine failed to hold and the European Union increased sanctions against Russia.

“We don’t imagine too many investors are surprised by the ongoing fighting in Eastern Ukraine,” a London-based analyst said. “The situation appears similar to the previous ceasefire last year, with frequent violations from the start.”

Investors may have been surprised, however, by the European Union’s decision to add new people and entities to the list of sanctions, he said.

“Nothing that should affect our markets, however,” he said.

Russia’s credit default swaps spreads widened 1 basis point on this news and a court’s ruling that Ural-Invest should pay AFK Sistema more than $1 billion in damages. Ural-Invest in 2009 sold a 70% stake of OAO Bashneft to Sistema, privatizing Bashneft. It was later determined that Bashneft should never have been privatized and that all subsequent share transactions were illegal.

Investors were also paying attention to Greece, where talks about the sovereign’s debt crisis and bailout plan fell apart.

Meanwhile, bonds from Asia were mostly unchanged on Tuesday and saw better buyers, even amid negative headlines out of Europe, a London-based trader said.

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