| LONDON, June 23
LONDON, June 23 Sberbank returned to global bond
markets on Monday, the first Russian state-run firm to do so
since February, while the rouble and stocks led gains on
European emerging markets thanks to strong Chinese economic
Markets broadly shrugged off the oil price surge caused by a
spreading insurgency in Iraq after a preliminary HSBC survey
showed activity in China's factory sector expanded in June for
the first time in six months as new orders surged.
U.S. Treasuries and the dollar have also eased off one-month
highs hit last week, keeping alive appetite for emerging assets.
Russian equities rose 0.5 percent though they stayed
off recent four-month highs and the rouble also firmed
0.4 percent after the Chinese data indicated continued
support for commodity exports from Russia.
They outperformed broader emerging equities which were down
0.3 percent as the Chinese data failed to buoy local
stocks though equities in eastern Europe and Turkey were firmer.
Russian coffers are also being bolstered by events in Iraq
that have pushed crude futures to nine-month highs while strong
global demand for yield encouraged Sberbank to announce a
five-year euro-denominated issue, just weeks after fears of
Western sanctions seemed to have shut capital markets for
The bank set initial guidance at 2.5-3.0 percentage points
over mid-swaps, equating to a yield of 3.2-3.7 percent that one
fund manager described as attractive.
He noted that the 2018 euro issue of state-run VEB was at
275 bps over Bunds, tighter than its dollar bond while
Sberbank's own 5-year dollar bond is at 240 bps over Treasuries.
"Initial price talk is very attractive, it will create
momentum and bring in people who want to make quick returns on
secondary market," the fund manager said. "Then (Sberbank) will
tighten the price to the last drop."
Bulgaria is also due to meet investors this week in London
for a planned 1.5 billion-euro issue. The roadshow is going
ahead despite a run on the country's fourth biggest lender,
Corpbank, that forced the government to step in.
Bulgarian credit default swaps (CDS) closed on Friday at 123
bps, the highest since early-December 2013, accordig to Markit
"This is not good news in terms of selling the Bulgarian
story. But they have had a positive fiscal and growth story
despite the very challenging external environment," said Danske
Bank analyst Lars Christensen, referring to the big role of
Greek banks in Bulgaria's economy.
Greek stocks fell 1.7 percent but regional fallout on
the rest of emerging Europe appears limited.
The Polish zloty firmed 0.2 percent to the euro
after hitting a one-month low on Friday on back of domestic
political turmoil caused by leaked tapes. The controversy
continues as fresh transcripts appeared on the weekend.
"The situation on foreign markets is stable, which is taming
moods in Poland a bit," a Warsaw-based dealer said.
Christensen agreed that the benign global backdrop was
trumping domestic emerging market stories such as the Bulgarian
bank problems, Polish politics and a looming Argentine default.
"The Chinese data was encouraging...and (Russian President
Vladimir) Putin has not been wholehearted in his support for
Ukrainian separatists and that's a positive," he added.
In the Middle East, the Iraq conflict was pressuring the
forward markets in the Saudi riyal with one-year dollar-riyal
forwards jumping to the highest since early 2011.
For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Editing by Toby Chopra)