A Comparative Analysis of High Yield Investments (and respective companies) in Russian Eurobonds
The aim of this report is to provide the fullest practical information on the high-yield Russian Eurobond instruments. The instruments, while denominated in Euro and US$ currencies provide yearly return up to 11%. The report covers all the instruments, which are available for Eurobond investors. The sectors include: industrials, energy, transport and telecoms and financial services. This report features some newcomers to the bond market, as well as the already familiar top stories that would provide exposure to both positive and negative events. Our top picks include TMK-18, Vimpelcom issues, RusHydro-15 and spreads of Bank of Moscow over VTB issues.
Ruble bond and Eurobond issuer mix has undergone major changes since the credit markets stepped into recovery. High-quality borrowers with investment-grade ratings dominate while new names are added from the dynamic transport and utility sectors to supplement the already well-represented oil and gas and help diversify risks. At the same time, on the back of high liquidity companies borrow for longer periods: up to 7 years on the ruble market for the first-tier corporates and up to 10 years for BB-rated issuers on the Eurobond market. Thus, many borrowers have built their own yield curves giving investors extra opportunities to employ relative value strategies. On the back of the appetite for quality risk, we feel that interest in Russian corporates and banks will overcome the crisis consequences.
Ruble bond and Eurobond issuer mix has undergone major changes since the credit markets stepped into recovery. High-quality borrowers with investment-grade ratings dominate while new names are added from the dynamic transport and utility sectors to supplement the already well-represented oil and gas and help diversify risks. At the same time, on the back of high liquidity companies borrow for longer periods: up to 7 years on the ruble market for the first-tier corporates and up to 10 years for BB-rated issuers on the Eurobond market. Thus, many borrowers have built their own yield curves giving investors extra opportunities to employ relative value strategies. On the back of the appetite for quality risk, we feel that interest in Russian corporates and banks will overcome the crisis consequences.
INTRODUCTION
Credit risk trends
High – yield segment
M&A stories
Short-term ideas
Russian corporate Eurobond univers
Russian financials Eurobond univers: quazi – sovereign banks
Russian financial Eurobond univers: private banks
INDUSTRIALS & ENERGY
Alrosa: a brilliant recovery story
Atomenergoprom: unique exposure to Russian nuclear industry
Evraz: best exposure to domestic growth
Federal Grid Company: value added utility business
NOVATEK: the rising star
TNK-BP: going global
RusHydro: riding the reform
TRANSPORT & TELECOMS
Russian Railways: gaining steam
Sovcomflot: discovering new lands
VImpelcom: strong credit in any weather
BANKING
Home credit and finance bank
CB renaissance Capital
Russian standard bank
Credit risk trends
High – yield segment
M&A stories
Short-term ideas
Russian corporate Eurobond univers
Russian financials Eurobond univers: quazi – sovereign banks
Russian financial Eurobond univers: private banks
INDUSTRIALS & ENERGY
Alrosa: a brilliant recovery story
Atomenergoprom: unique exposure to Russian nuclear industry
Evraz: best exposure to domestic growth
Federal Grid Company: value added utility business
NOVATEK: the rising star
TNK-BP: going global
RusHydro: riding the reform
TRANSPORT & TELECOMS
Russian Railways: gaining steam
Sovcomflot: discovering new lands
VImpelcom: strong credit in any weather
BANKING
Home credit and finance bank
CB renaissance Capital
Russian standard bank
