02.12.2008 - MDM Comment: EVRAZ, ALFA, NOMOS

Russian equities and bonds are slightly lower today, although a reversal may be in progress, with US equity futures pointing higher. Local bonds are under sellers’ pressure, as more investors are now expecting further ruble weakness going forward.

Today’s corporate news is brief and includes Evraz’s one-notch rating downgrade from Moody’s (to Ba3, the rating agency is still constructive on the credit), as well as VEB’s approval of subordinated loans to Alfa Bank (Ba1/BB) and NOMOS Bank (Ba3/B+). The two banks are due to receive RUB10 and 5 bn in loans, respectively. This is, of course, great news for the bondholders of the two banks for two reasons: First, it is a signal of trust from the state; and second, the sub-loans (which will be coupled with similar loans from shareholders) will indeed strengthen their respective balance sheets. We believe this move will prove to be very timely, as all financial institutions are likely to face higher levels of loan impairments/losses going forward. In our view, ALFAUA 09 (80% to maturity in May 2009) could be a good buy on the back of the news.

02.12.2008 14:20