LONDON, June 23 (Reuters) - 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 data.
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 Russian firms.
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)