CEE Debt Market Strategy monthly
25 February 2016
Historical perf. 2y LCY bond1 6% 5% 4% 3% 2% 1% 0% -1% CZ HU
PL
PP
RO RU FX
TR
DE
US
CE/SEE local debt markets remain quite resilient to EM jitters and recent euro area peripheral stress Renewed global central bank (CB) dovishness opens room for stepped-up dovish local CB rhetoric We remain bullish on Hungary, see tighter CZGB spreads, whilst remain cautious for high-yielders RU and TR We see more constructive outlook for CEE Eurobonds in the near-term Eurobond primary markets are expected to see more issuance in March We buy PL on fewer negative news, also add RU and upgrade KZ bonds
AP (PP+FX)
1) between 22-Jan-16 and 23-Feb-16
MARKET STRATEGY (horizon: Jun-16; B: Buy, H: Hold, S: Sell)1
Historical perf. 10y LCY bond1 10%
Eurobonds
8%
LCY Bonds
FX vs. EUR
Recommendation Rationale
EUR USD 2y 10y
6% 4%
--
--
--
Eurobonds: Government survived non-confidence motion but economic outlook remains challenging.
--
--
H (H)
Eurobonds: New cabinet faces tough reform path, debt overhang risk and large refinanincing needs at 19% of GDP.
B (B)
H (H)
B B H (H) (H)2 (B)
H (H)
BG
H (H)
HR
H H (H) (H)
CZ
H H H (H) (H) (H)
HU
B (H)
2%
--
Eurobonds: Stable credit rating, low-beta for diversification market.
0% -2% CZ HU PP
PL
RO RU
TR
FX
DE US
AP (PP+FX)
1) between 22-Jan-16 and 23-Feb-16
Expected perf. 2y LCY bond -> Jun-161
6%
B (B)
B (B)
H (B)
H (H)
H (H)
RO
H (H)
H (H)
H (H)
H (H)
H (B)
RU
B (B)
B (B)
H (H)
H (H)
H (H)
RS
--
H (S)
--
--
H (H)
Eurobonds: Surprise of early parliamentary elections, too tight spread relative to peers.
MK
B (B)
--
--
--
--
Eurobonds: Delay in parliamentary elections likely due to opposition demands backed by EU/USA. Still, political outlook improved.
KZ
--
B (H)
2% -2% -4% CZ HU PP
PL FX
RO RU
TR
DE US
AP (PP+FX)
1) between 23-Feb-16 and end-Jun-16
Expected perf. 10y LCY bond -> Jun161 8% 6% 4% 2%
LCY debt market should remain supported by further MP easing including bond-market-friendly measures, dovish global CB backdrop.
PL
4% 0%
Eurobonds: A notch upgrade very likely in a 6m horizon, HU trades to BBB-/positive outlook, still short-term Buy due to low supply.
Eurobonds: Looks still oversold on media headlines more than fundamentals and risk would suggest, we buy PL.
10% 8%
LCY bond yield spread over Bunds still too wide despite recent tightening. Since more local easing is in the cards, we maintain our Buy recommendation in light of long-term CZK appreciation potential.
LCY bonds recovered from surprise rating downgrade in line with zloty amidst improving global sentiment. Rate cut bets are diminishing, but more bond-market-friendly regulatory easing and global CB dovishness could anchor the curve. Eurobonds: Strong fundamentals, technocrat government but fiscal discipline slackening possible closer to elections. LCY debt market should remain fairly stable despite political headline risks. Front-end is firmly cemented on excess liquidity conditions, whilst long-end seems vulnerable, mainly due to tight pricing. Eurobonds: The possibility of removal of some western sanctions in 2016 to be credit positive, buying into stable outlook. Pricing-out of rate cut bets on oil/RUB/inflation risks to continue which should further weigh on Russian rouble debt. In H2 re-intensifying rate cut bets to lift OFZ market attractiveness.
Eurobonds: Relatively cheap pricing against rating and peers warrants a technical buy.
0%
Eurobonds: Strong fundamentals despite turbulent politics, relatively cheap to peers and vs. rating.
-2% -4%
TR
B (B)
B (B)
H (H)
H (H)
B (H)
LCY debt market could suffer from possible emergency hikes in mid2016 with a central bank being clearly behind the curve. Although performance outlook looks promising our conviction is low. Before adding exposure, we want to see MP normalisation (as early as of June) and calming local and international politics.
UA
--
S (S)
--
--
H (H)
Eurobonds: Political crisis remains unresolved, reforms delay likely, IMF loan delay likely.
BY
--
H (H)
--
--
S (S)
Eurobonds: The removal of western sanctions is credit positive but the news fully priced in.
-6% CZ HU PP
PL FX
RO RU
TR
DE US
AP (PP+FX)
1) between 23-Feb-16 and end-Jun-16 FX: currency performance (chg LCY/EUR) PP: bond performance (price chg + carry) AP: absolute performance (PP + FX) DE and US: only price performance (PP) HU: not 2y, but 3y tenor Source: Bloomberg, RBI/Raiffeisen RESEARCH
1) recommendations based on absolute expected performance: LCY bonds: absolute performance in LCY; Eurobonds: based on expected spread change. 2) HU: 3y, not 2y tenor; previous recommendations in brackets (as of 25-Jan-16 with horizon end-Mar-16; RU LCY bonds as of 11-Feb-16); Source: RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
Local bond market strategy Constructive on CE/SEE but cautious on high-yielding RU and TR MARKET STRATEGY (until Jun-16)1 LCY Bonds 2y
FX
10y
vs. EUR
B (B)
H (H)
CZ
H (H)
HU
H (H)
B (B)
S (H)
PL
H (B)
H (H)
H (H)
RO
H (H)
H (H)
H (B)
RU
H (H)
H(H)
H (H)
TR
H (H)
H (H)
B (H)
2
1) based on expected absolute performance in LCY; previous recommendations (as of 25-Jan-16; RU: 11-Feb-16) in brackets; B: Buy; H: Hold; S: Sell 2) HU: 3y, not 2y tenor Source: RBI/Raiffeisen RESEARCH
RUB weakness to stop disinflation 22%
80
18%
70
14%
60
10%
50
6%
40
2% Jan-14
Sep-14
30 Jan-16
May-15
CBR key rate CPI (yoy) 5y OFZ yield USD/RUB (rhs) Base rate: 5y high 17.00; 5y low 5.50 5y: 5y high 18.4; 5y low 6.0 USD/RUB 5y high: 85.9573; 5y low: 27.1543 Source: Bloomberg, RBI/Raiffeisen RESEARCH
CZ-DE spread to tighten further 75
28.5
50
28.0
25
27.5
0
27.0
-25 Jan-14
26.5 Sep-14
May-15
Jan-16
CZ-DE 2y spread (bp) CZ-DE 10y spread (bp) EUR/CZK (rhs) CZ-DE 2y spread 5y high: 166; 5y low: -32 CZ-DE 10y spread 5y high: 214; 5y low -23 EUR/CZK 5y high: 28.4; 5y low: 24.0 Source: Bloomberg, RBI/Raiffeisen RESEARCH
2
January’s market correction that was triggered by global growth concerns, bearish commodity prices and uncertainties about the pace of US rate hikes left CEE local debt markets fairly stable. Since our last CEE Debt Market Strategy has been published on 25 January, investor differentiation in favor of CE/SEE continued and most local currency (LCY) debt markets managed to recoup the moderate losses suffered during January. Global central bank dovishness and the latest stabilsation in oil prices helped global risk sentiment to improve. Russia benefitted from the latter the most in our research universe with RUB gaining almost 4% versus EUR, which, in turn, triggered also price gains mostly in longer OFZs. The other CE/SEE local debt markets tracked the outperformance in Bunds with the German and US 10y benchmark yields near historical lows currently. The recent stress in euro area (EA) peripheral names – in particular Portugal – did finally not spillover to bigger EA names, hence, leaving our region broadly unaffected. So on top of falling yield levels especially at the long end of the curves, finally, currency gains added to the favorable absolute performance in the CE/SEE space. For Russia we do not turn bullish yet despite the recent gains which we regard as temporary. The economy is likely to remaining in recession mode this year, while CPI inflation is set to reverse its latest fall that was mainly due to statistical base effects. We recently had to revise our annual GDP growth outlook for 2016 from 0% to -2% mainly on a downward revision of our oil price outlook for 2016 from USD 56 bbl to USD 39 bbl (Brent). There are several factors which will likely keep inflation above the CBR target of 7% one year from now. In our view it is mainly the latest rouble depreciation that has not yet passed fully to inflation. Also, budget deficit financing using the reserve fund leads to additional money emission, both potentially weakening the rouble and increasing price pressures. We therefore estimate CPI inflation at 9-10% in 2016. In summary, future disinflationary base effects could be offset – a view that is also shared by the CBR according to its hawkish comments recently. The ongoing rise in inflation expectations is another concern for the CBR. Against all this, we have lost conviction that the CBR will have the room to resume rate cuts in 2016 at all. As things stand we would therefore like to see CPI inflation peaking before adding exposure in OFZs. For the other high-yielder Turkey our stance is similar in light of the renewed rise in CPI inflation coupled with local/geopolitical risks. But we regard the situation in Turkey as more fragile due to lacking CB credibility with the TCMB clearly falling behind the curve. This bears the risk for emergency rate hikes in mid-2016 once the new MPC takes office in June. Our outlook for CE/SEE LCY debt markets remains broadly unchanged compared to our end-January calls. We continue to prefer long-dated HGBs with further bond-market-friendly monetary stimulus, including rate cuts, in the pipeline. Moreover, favorable developments on the fiscal front – including the latest statements by policymakers to target a balanced budget in the next few years – should fuel the already positive credit story in Hungary (return to investment grade still pending in H1). In Poland, fears of irrational political actions decreased somewhat. The likely softening of the FX loan conversion scheme as well as the increasing confidence of market participants in terms of Polish monetary policy prudence restored some confidence in local financial markets in recent weeks. While we continue to see some space left for further spread tightening in 10y CZ-DE, Romania should face increasing political risks given the approaching local/parliamentary elections in summer/autumn. Financial analyst: Stephan Imre, RBI Vienna
Please note the risk notifications and explanations at the end of this document
Local bond market strategy Rates and FX market overview1
CZ
2y LCY bond yields1
current2
Jun-16
Sep-16
Dec-16
5y low
5y avg
5y high
Key
0.05
0.05
0.05
0.05
0.05
0.27
0.75
2y
-0.18
-0.30
-0.20
-0.20
-0.36
0.56
2.12
10y
0.40
0.80
0.90
1.10
0.36
2.10
4.36
12%
CZK
27.0
27.0
27.0
27.0
24.0
26.1
28.4
9%
18% 15%
6% 3%
HU
Key
1.35
1.00
1.00
1.00
1.35
4.12
7.00
3y
1.9
1.7
1.8
1.9
1.5
4.8
10.5
10y
3.3
3.2
3.3
3.4
2.7
5.8
10.7
HUF
307
315
315
320
262
297
323
Key
1.50
1.50
1.50
1.50
1.50
3.08
4.75
18% 15%
0% Jan-14 PL
Sep-14
May-15
HU
Jan-16
TR
RU
1) HU: 3y tenor, not 2y Source: Bloomberg, RBI/Raiffeisen RESEARCH
10y LCY bond yields PL
2y
1.5
1.9
2.0
2.2
1.3
3.2
5.2
10y
2.9
3.4
3.4
3.5
2.0
4.2
6.3
PLN
4.4
4.35
4.30
4.30
3.9
4.2
4.6
12% 9% 6%
RO
Key
1.75
1.75
1.75
1.75
1.75
4.20
6.25
2y
1.2
1.6
1.7
2.0
0.9
4.2
7.3
10y
3.4
3.9
4.0
4.1
2.6
5.3
7.6
RON
4.5
4.5
4.4
4.4
4.1
4.4
3% 0% Jan-14 PL
4.6
Sep-14
May-15
HU
TR
Jan-16 RU
Source: Bloomberg, RBI/Raiffeisen RESEARCH
10y yield spread (bp)1
RU
Key
11.00
11.00
11.00
11.00
5.50
9.46
17.00
2y
9.8
10.1
10.0
10.0
5.8
8.1
18.9
10y
9.9
10.4
10.5
10.2
6.7
9.0
15.8
RUB2
83.2
82.4
75.8
70.7
38.4
49.0
89.5
1,500 1,200 900 600
TR
Key
7.50
8.50
9.50
9.50
4.50
6.59
10.00
2y
10.8
10.5
10.0
9.8
4.7
8.7
11.3
10y
10.5
10.7
10.3
10.0
6.0
8.9
11.1
TRY
3.2
3.1
3.0
3.1
2.1
2.6
3.5
300 0 Jan-14 PL
Sep-14
May-15
HU
TR
Jan-16 RU
1) PL/HU vs. DE; RU/TR vs. US Source: Bloomberg, RBI/Raiffeisen RESEARCH
DE
Key
0.05
0.05
0.05
0.05
0.05
0.55
1.50
2y
-0.5
-0.4
-0.4
-0.4
-0.54
0.17
1.91
10y
0.2
0.5
0.8
1.0
0.1
1.4
3.5
EUR
1.1
1.03
1.01
1.01
1.05
1.29
1.49
Yield curve steepness (bp)1 300 200 100 0 -100
US
Key
0.38
0.75
1.00
1.50
0.04
0.12
0.38
2y
0.8
1.2
1.4
1.7
0.15
0.43
1.09
10y
1.8
2.4
2.7
3.1
1.4
2.3
3.6
1) rates and yields in %; yields: ask yield to maturity; FX vs. EUR 2) as of 22-Feb-16, 4:32 p.m. CET Source: Bloomberg, RBI/Raiffeisen RESEARCH
-200 -300 Jan-14 PL
Sep-14
May-15
HU
Jan-16
RO
RU
1) 10y minus 2y yield Source: Bloomberg, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
3
Local bond market strategy Monetary policy overview Inflation snapshot
Key rate forecast (expected change, bp)
20
150
16
100
50
0
-50
Poland
12 Hungary
8
Romania
-4
Russia
RO
CZ
PL
TR
0 RU
Czech Rep.
HU
4
Turkey CPI, % yoy (52w high)
CPI, % yoy (52w low) 3m horizon (bp)
CPI, % yoy (current) Source: Bloomberg, RBI/Raiffeisen RESEARCH
6m horizon (bp)
Source: Bloomberg, RBI/Raiffeisen RESEARCH
CENTRAL BANK WATCH (%) Curr.1 Czech National Bank (CNB) 2w repo rate
Hungarian National Bank (MNB) 3m deposit rate
National Bank of Poland (NBP) 2w repo rate
National Bank of Romania (BNR) Key policy rate
Bank of Russia (CBR) 1w repo rate
0.05
1.35
1.50
1.75
11.00
Last change
Forecast (%)
Next meeting
Comment
Jun-16 Sep-16 Dec-16
0.05
1.00
1.50
1.75
11.00
0.05
Exit from FX intervention regime – introduced for keeping CZK above the floor of EUR/CZK 27.00 – is likely to be delayed beyond Nov 2012 Q4 2016. Speculations on negative base/deposit rate increased 0.05 31/03/2016 (-20bp) after dissapointing reflation dynamics prompted CNB to discuss this option at last meeting (not our base case). MP tightening via interest rate channel only if inflationary dynamics prove sufficiently forceful.
1.00
1.00
MNB remains in easing mood given extension of its FGS cheap loan program. In parallel, another growth-supporting scheme (GSP) has been launched in Jan-16 flanked by additional MP tools which should incentivize SME lending (LTRO, new MNB deposit and IRS 22/03/2016 facilities). Tailwinds from global CB dovishness come on top of disappointing local CPI inflation dynamics and make us expect another downward adjustment to the base rate. In case of ongoing HUF strength, our call would receive another boost.
1.50
NBP remains neutral balancing between promising economic activity and stuttering reflation dynamics. Since the CPI inflation target is likely to remain out of reach, market pricing is for more rate cuts, Mar 2015 09/03/2016 especially in light of a reshuffled MPC. Since new MPC seems not 1.50 (-50bp) that dovish as feared, we foresee stable base rate and expect NBP liftoff in Q3 2017. However, we do not exclude unconventional MP easing measures including further bond-market-friendly measures.
1.75
Rate cutting cycle is over despite dramatic tax-cut-induced fall in CPI this year. Additional easing through further RRR cuts remains May 2015 1.75 31/03/2016 likely whilst fiscal risks warrant cautiousness on the MP front. Exit (-25bp) from ultra-loose liquidity conditions is a major challenge as 2016 progresses, only afterwards rate hikes could be expected.
11.00 11.00
Jul 2015 (-15bp)
Jul 2015 (-50bp)
CBR delays the rate cuts due to RUB weakness and inflationary risks, an assessment we share. Room to re-start rate cuts only in Q1 17 in our view with latest RUB volatility/CB communication incre18/03/2016 asingly softening aggressive market pricing. Excess money market liquidity, at the same time, is already easing monetary conditions which could intensify going forward.
Central Bank of Turkey (TCMB) 1w repo rate
7.50
8.50
9.50
TCMB dropped its phrase of simplification of MP toolkit, i.e. in fact via base rate tightening, from its latest wording, but keeps weighted Feb 2015 average funding costs close to 9%. Until the new MPC is formed by 9.50 24/03/2016 (-25bp) June, we do not expect MP thightening/simplification which fortunately coincides with likely pause in Fed tightening in March. In H2 new MPC should finally bow to selling pressure and adjust 1w repo.
European Central Bank (ECB) Main refinancing rate
0.05
0.05
0.05
0.05
1.00
Basically our Western Economists believe in continutaion of rate Dec 2015 normalisation process following December's liftoff. Nevertheless, 1.50 16/03/2016 (+25bp) the likelihood of a pause in March increased as rate trajectory remains highly dependent on oil price/stock markets/global growth.
Federal Reserve Bank (Fed) Fed funds rate
0.38
0.75
Ultra-loose monetary conditions to prevail, QE program until at Sep 2014 least end-Mar-17. With regards ECB deflation fighting credibility, 10/03/2016 (-10bp) speculation on more ECB easing as of March intensified with another 10bp deposit cut to -40bp already priced-in.
1) as of 22-Feb-16, 6:10 p.m. CET; Source: Bloomberg, RBI/Raiffeisen RESEARCH
4
Please note the risk notifications and explanations at the end of this document
Local bond market strategy 10y LCY yields and swaps 10y CZK yield and swap
10y HUF yield and swap
3.0%
60
2.5%
40
2.0%
20
1.5%
0
1.0%
-20
0.5%
-40
0.0% Jan-13
-60 Oct-13
Jul-14
Apr-15
Jan-16
7%
120
6%
100
5%
80
4%
60
3%
40
2% Jan-13
20 Oct-13
Swap Spread (bp, r.h.scale) 10y LCY bond yield 10y IRS Rate
Jul-14
Apr-15
Jan-16
Swap Spread (bp, r.h.scale) 10y LCY bond yield 10y IRS Rate
Source: Bloomberg, RBI/Raiffeisen RESEARCH
Source: Bloomberg, RBI/Raiffeisen RESEARCH
10y PLN yield and swap
10y RON yield and swap
6%
80
7%
200
5%
60
6%
150
4%
40
5%
100
3%
20
4%
50
2%
0
3%
0
-20
2% Jan-13
1% Jan-13
Oct-13
Jul-14
Apr-15
Jan-16
-50 Oct-13
Jul-14
Source: Bloomberg, RBI/Raiffeisen RESEARCH
Source: Bloomberg, RBI/Raiffeisen RESEARCH
10y RUB yield and swap
10y TRY yield and swap
18%
300
16%
200
14%
100
12%
0
10%
-100
8%
-200
6% Jan-13
-300 Jul-14
Apr-15
Swap Spread (bp, r.h.scale) 10y LCY bond yield 10y IRS Rate Source: Bloomberg, RBI/Raiffeisen RESEARCH
Jan-16
Swap Spread (bp, r.h.scale) 10y LCY bond yield 10y IRS Rate
Swap Spread (bp, r.h.scale) 10y LCY bond yield 10y IRS Rate
Oct-13
Apr-15
Jan-16
14%
100
12%
0
10%
-100
8%
-200
6% Jan-13
-300 Oct-13
Jul-14
Apr-15
Jan-16
Swap Spread (bp, r.h.scale) 10y LCY bond yield 10y IRS Rate Source: Bloomberg, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
5
Eurobond market strategy The Revenant1 CEE spread vs. UST yield2 500
5.0
400
4.0
300
3.0
200
2.0 1.0
100 Feb-11
Feb-13
Feb-15
CEE spread 10Y UST yield (r.h.scale) 2) USD segment, spread in basis points (bp), yield - % p.a. Source: Thomson Reuters, JP Morgan, RBI/Raiffeisen RESEARCH
CEE EMBIG price change vs. other EM3 Africa Mid.East Asia LATAM CEE 0
5
10
3) USD segment, price index net change %, mom = -1M Source: Thomson Reuters, JP Morgan, RBI/Raiffeisen RESEARCH
CEE rating spread4 -300 -200 -100
0
100 200
LT (A-) PL (BBB+) KZ (BBB-) RO (BBB-) TR* (BBB-) HU (BB+) RU (BB+) HR (BB) RS (BB-) BY (B-) UA (B-) 4) rating spread in basis points, sovereign spread minus respective rating aggregated spread (EMBIG USD) Source: Thomson Reuters, JP Morgan, RBI/Raiffeisen RESEARCH
1) The Revenant is a 2015 American historical action adventure film directed by Alejandro G. Iñárritu. A frontiersman Hugh Glass (Leonardo DiCaprio) on a fur trading expedition in the 1820s fights for survival after being mauled by a bear and left for dead by members of his own hunting team.
6
Our prediction of a small rebound in the Eurobond market in February has fully materialised whereas the dovishness of major global central banks helped to keep the CEE markets on an upward path. In particular the ECB easing policy outlook helped EUR-based CEE sovereigns including euro area members, i.e. Lithuania. Prior rally in the EU peripherals also helped to cut their appeal going forward which could have helped to bring some funds back to CE sovereigns. The softening of US Fed wording implying a slower pace of action in 2016 also contributed to bettering of the market sentiment resulting in Eurobond yields’ decline for nearly all CEE sovereigns except Ukraine. In the USD segment we rightly predicted partial tactical recovery of CIS markets which were somewhat oversold. Our strategy in the USD segment to sell Ukraine (-2.9% EMBIG price) and buy Russia (+2.6% EMBIG price) yielded positive gains while putting Kazakhstan on hold was also a correct idea sparing us from lacklustre performance. On the other hand Turkey only partially met our expectations despite it remains among relatively cheaper valued sovereigns spread-wise. Meanwhile S&P’s decision to downgrade Kazakhstan’s rating from BBB to BBB- with negative outlook caught us completely out of guard. We tend to blame that partially on the multiple downgrade carried for oil producing countries by S&P while the decision of the agency to leave Russia’s rating unchanged at BB+ reflects RU strong fiscal position despite oil price declines. In CEE primary markets the issuing activity returned with Romania adding EUR 1.25 bn to the EUR outstanding 2025s and 2035s. Bulgaria also cited plans to sell up to EUR 2 bn while Lithuania and Hungary potentially could follow too. Despite this the year-to-date volumes remain low reaching only EUR 4 bn or a 40% of Q1 2015 issuance. As easing market concerns could contribute to better risk appetite we would expect March to bring more sovereign placements. Among the most interesting ones could be Russia’s return to Eurobond markets. Despite earlier promises not to issue until Western sanctions would be lifted it appears that Russia already holds active investor consultations and could be ready to issue any time soon. Taking into account relatively expensive OFZ borrowing, sticky inflation and scarcity of long-term domestic capital Russia could place up to USD 3-5 bn on international markets in near future. We take cautiously constructive outlook on CEE expecting accommodative ECB policies and slower US Fed push to bring positive stimulus for Eurobond investors. As volatility could be receding we see a possibility of relative spread tightening for Eurobonds vs. UST and Bunds taking into account the already wider spreads caused by the underlying yield declines in euro area and USA. Among low risk profile countries we continue to favour Poland which remains relatively oversold due to old negative headlines despite performing relatively well in February. We believe that CHF law draft will be positively revised while fiscal discipline will not suffer in the interim and the other two rating agencies will not follow S&P. In Hungary the upgrade news is long overdue while new supply would not be enough to compensate for smaller issuance in the past. Additionally we could see both Hungary and Lithuania opting for swapping USD Eurobonds into new EUR issues as technically that would be possible since both markets are not large. In riskier markets we stick to Russia and Turkey as CDS for both countries trade with a 1-notch rating discount while fundamentals would suggest slightly stronger rating. At the same time we reinstate buy call for Kazakhstan believing its Eurobonds were unduly punished while historical pattern suggests KZ spread should be some 30-40bp lower. On the other hand lifting of Western sanctions was already priced into Belarus spreads while Ukraine’s Eurobonds will continue to suffer from political instability affecting the IMF loan disbursement and trimming economic prospects. Financial analyst: Gintaras Shlizhyus, RBI Vienna
Please note the risk notifications and explanations at the end of this document
Eurobond market strategy Primary market overview EM primary market issuance history1
CEE sovereign issuers, USD bn1
120
8
90
6
60
CEE sub-regional division, USD bn1 45
30
4
30
15
2
CEEMEA
LATAM
0 PL KZ BG SI TR SK RO LT HR LV UA ME AL AM MK
2016
2015
2014
2013
2012
2011
2010
0
ASIA
1) USD bn, 2016 - year-to-date, CEEMEA - Central Eastern Europe, Middle East and Africa Source: Bloomberg, BondRadar, RBI/Raiffeisen RESEARCH
2015
0 2015
2016 (YTD)
CE
1) a sum of country issues, only CEE sovereigns which issued bonds during 2015 and 2016 year-to-date Source: Bloomberg, BondRadar, Raiffeisen RESEARCH
2016 (YTD) SEE
EE
1) CE includes Baltic countries, SEE includes Turkey Source: Bloomberg, BondRadar, RBI/Raiffeisen RESEARCH
CEE sovereign Eurobond pipeline 20161 Issuer
Rating
Currency
Date
Lead managers
Bulgaria
Baa2/BB+/BBB-
EUR 2 bn
Q1 2016
TBA
Hungary
Ba1/BB+/BB+
EUR 1 bn
Q1 2016
TBA
Hungary
Ba1/BB+/BB+
RMB
2016
Bank of China
Lithuania
A3/A-/A-
EUR 500 mn
Q1 2016
TBA
Romania
Baa3/BBB-/BBB-
EUR 1.75 bn
H1 2016
TBA
Russia
Ba1/BB+/BBB-
EUR/USD/CNY
2016
TBA
Belarus
Caa1/B-
USD 500 mn
2016
TBA
Czech Rep
A1/AA/AA-
EUR 2 bn
2016
TBA
Ukraine2
USA guaranteed
USD 1 bn
2016
TBA, USAID
1) TBA - to be announced, Ratings - S&P, Moody's, Fitch, based on incoming information, pipeline is not fixed and subject to change 2) Ukraine issue - full faith guarantee from USAID (USA government agency) Source: Bloomberg, BondRadar, RBI/Raiffeisen RESEARCH
ISSUANCE CHRONOLOGY, CEE Q4 2015 AND 2016 YEAR-TO-DATE Price1
Equivalent, mn Date
Issuer
ISIN
7-Oct-15
Poland
XS1306382364
15-Oct-15
Lithuania
15-Oct-15 21-Oct-15
FX
CCY
USD
EUR
1,750
XS1310032187
EUR
Lithuania
XS1310032260
Romania
21-Oct-15 5-Nov-15 24-Nov-15 8-Dec-15 11-Jan-16
Poland
Re-offer
Spread/Yield1
Coupon %
Maturity
Market
At issue
1,953
0.875
14-Oct-21
99.623
101.400 MS+45
52
750
846
1.25
22-Oct-25
98.923
104.710 MS+43
22
EUR
750
850
2.125
22-Oct-35
99.469
111.353 MS+69
XS1312891549
EUR
1,250
1,401
2.75
29-Oct-25
99.183
101.975 MS+190
Romania
XS1313004928
EUR
750
841
3.875
29-Oct-35
99.248
100.125 MS+245
Albania
XS1300502041
EUR
450
488
5.75
12-Nov-20
99.472
104.545 5.875%
Macedonia
XS1318363766
EUR
270
283
4.875
1-Dec-20
98.921
Latvia
XS1333704713
EUR
550
593
0.50
15-Dec-20
99.843
XS1346201889
EUR
750
805
2.375
18-Jan-36
98.499
99.804 MS+493 101.597 MS+28 99.063 MS+100
Current
49 198 281 4.65% 483 15 139
11-Jan-16
Poland
XS1346201616
EUR
1,000
1,086
1.50
19-Jan-26
99.613
100.225 MS+65
91
14-Jan-16
Slovakia
SK4120011420
EUR
1,000
1,089
1.625
21-Jan-31
99.894
105.812 MS+38
30
18-Feb-16
Romania
XS1312891549
EUR
750
854
2.75
29-Oct-25
101.688
101.975 2.55%
2.52%
18-Feb-16
Romania
XS1313004928
EUR
500
558
3.875
29-Oct-35
99.645
100.125 3.90%
3.86%
1) CCY - issue currency, re-offer - placement price, market - current price and current spread/yield, at issue - pricing yield or spread, for comparison reason yield or spread is used dependent on reference pricing measure Source: Bloomberg, BondRadar, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
7
Eurobond market strategy Secondary market overview CEE Eurobond z-scores & spreads1
CEE price performance net of Composite index1
2
1000
104
1
750
102
0
500
-1
250
100 98 96
0
Z-score 1m
94
UA (B-)
BY (B-)
RS (BB-)
HR (BB)
RU (BB+)
HU (BB+)
TR* (BBB-)
RO (BBB-)
KZ (BBB-)
PL (BBB+)
LT (A-)
-2
92 Feb-11
actual spread, bp
1) z-score - actual less 1-month mean normalised by 1-m standard deviation, Turkey - Fitch rating Source: Thomson Reuters, JP Morgan, RBI/Raiffeisen RESEARCH
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
1) CEE EMBIG price index gain minus Composite EMBIG gain Source: Thomson Reuters, JP Morgan, RBI/Raiffeisen RESEARCH
CEE EUROBONDS EXPIRING IN 1 YEAR1 Market Price Issuer/rate/due
Bid
Ask
TURKEY 5 03/01/16
100.1
100.4
MONTEN 7 1/4 04/08/16
100.7
101.4
ROMANI 5 1/4 06/17/16
101.6
REPHUN 3 1/2 07/18/16 SLOVEN 4.7 11/01/16
m/m %
YTM mid.
Spread vs.
Mdur.
ISIN
% p. a.
Bmk, bp
years
---
5y max
5y min
-0.40
109.6
100.1
-8.59
-819
0.0 XS0245387450
-0.36
107.0
90.2
-1.25
-85
0.1 XS0614700424
101.8
-0.29
108.7
95.8
-0.20
-11
0.3 XS0638742485
101.2
101.5
-0.25
104.6
76.8
0.21
61
0.4 XS0240732114
103.2
103.3
-0.31
109.3
102.7
0.00
41
0.7 XS0982712795
TURKEY 7 09/26/16
103.1
103.3
-0.07
118.1
103.1
1.49
102
0.6 US900123AZ36
LATVIA 5 1/4 02/22/17
103.9
104.3
-0.31
112.8
99.6
1.12
60
1.0 XS0747927746
EUR
USD
1) yield/spread - mid market, expiring Eurobonds except the already paidback, m/m - month on month, 5-year min and 5-year max, YTM mid - yield to maturity based on mid market price, Bmk - benchmark, Mdur - modified duration, ISIN - international security identification number Source: Bloomberg, Raiffeisen RESEARCH
CEE EMBIG expected spread change (bp)1 -50
0
50
5y CDS CEE sample history (bp)1 100
660
LT (A-) PL (BBB+) KZ (BBB-)
440
RO (BBB-) TR* (BBB-) HU (BB+) RU (BB+)
220
HR (BB) RS (BB-) BY (B-)
0 Feb-11
UA (B-) spread change (mom)
expected spread change (+1-month)
1) USD segment, 1-month spread change net, +3 months spead forecast, ratings S&P, TR rating - Fitch Source: Thomson Reuters, JP Morgan, RBI/Raiffeisen RESEARCH
8
Feb-12 PL
Feb-13
Feb-14
Feb-15
RO
Feb-16
RU
1) CEE sample includes one country from each of CEE sub-regions, i.e. Poland from CE, Romania from SEE and Russia from EE Source: Bloomberg, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
Eurobond market strategy Secondary market overview (continued) CEE EUROBOND MARKET1 Market Price Issuer/rate/due
Bid
Ask
m/m %
5y max
5y min
YTM mid.
Spread vs.
Mdur.
ISIN
% p. a.
Bmk. bp
years
---
EUR BGARIA 4 1/4 07/09/17
106.2
106.5
0.28
111.8
100.3
-0.36
10
1.3 XS0802005289
BGARIA 2 03/26/22
101.6
102.4
-0.75
102.7
95.8
1.66
192
5.6 XS1208855616
BGARIA 2 5/8 03/26/27
97.8
98.8
0.00
100.6
90.8
2.81
255
9.3 XS1208855889
CROATI 5 7/8 07/09/18
109.5
109.8
-0.01
112.2
87.7
1.69
221
2.2 XS0645940288
CROATI 3 7/8 05/30/22
101.2
101.7
-0.91
107.1
96.4
3.61
386
5.3 XS1028953989
92.2
92.8
-1.22
98.2
89.6
4.00
391
7.5 XS1117298916
REPHUN 4 3/8 07/04/17
105.2
105.7
-0.49
108.0
77.3
0.34
80
1.3 XS0284810719
REPHUN 3 7/8 02/24/20
111.1
111.7
-0.08
113.1
69.3
0.95
138
3.8 XS0212993678
LITHUN 4.85 02/07/18
109.6
109.9
-0.30
114.3
94.5
-0.15
38
1.9 XS0327304001
LITHUN 2 1/8 10/29/26
112.7
113.2
1.90
116.9
98.6
0.85
61
9.6 XS1130139667
POLAND 5 5/8 06/20/18
112.9
113.1
-0.02
122.6
102.1
0.02
54
2.2 XS0371500611
POLAND 4 03/23/21
116.7
117.0
0.36
121.5
87.8
0.62
95
4.6 XS0543882095
POLAND 3 01/15/24
CROATI 3 03/11/25
112.7
113.3
0.73
122.2
100.0
1.26
134
7.1 XS1015428821
POLAND 0 7/8 05/10/27
91.3
91.7
0.41
99.2
86.1
1.71
145
10.4 XS1209947271
ROMANI 6 1/2 06/18/18
113.9
114.3
-0.38
119.0
95.9
0.36
88
2.1 XS0371163600
ROMANI 4 5/8 09/18/20
116.5
116.9
-0.54
117.8
99.7
0.88
126
4.1 XS0972758741
ROMANI 2 7/8 10/28/24
104.0
104.8
-0.26
109.5
98.9
2.31
228
7.6 XS1129788524
MACEDO 3.975 07/24/21
95.0
96.0
0.26
103.3
94.8
4.93
524
4.6 XS1087984164
MONTEN 5 3/8 05/20/19
102.8
103.5
-0.09
106.7
101.0
4.29
476
2.8 XS1069342407
MONTEN 3 7/8 03/18/20
95.2
96.1
0.25
99.3
92.1
5.08
551
3.5 XS1205717702
TURKEY 5 7/8 04/02/19
111.8
112.6
-0.85
119.4
101.2
1.78
225
2.8 XS0285127329
TURKEY 4.35 11/12/21
106.7
107.6
-0.71
112.7
104.6
2.97
326
5.0 XS0993155398
TURKEY 4 1/8 04/11/23
104.5
105.3
-1.11
112.0
102.6
3.33
349
5.9 XS1057340009
BELRUS 8.95 01/26/18
103.1
104.0
1.04
111.2
70.0
6.94
620
1.7 XS0583616239
SERBIA 5 1/4 11/21/17
103.6
104.1
0.06
107.1
96.8
2.96
226
1.6 XS0856951263
SERBIA 7 1/4 09/28/21
112.2
112.9
0.05
119.6
89.6
4.67
335
4.5 XS0680231908
CROATI 6 1/4 04/27/17
104.1
104.5
0.26
112.3
96.0
2.53
197
1.1 XS0776179656
CROATI 6 3/8 03/24/21
108.1
108.7
-0.10
117.8
86.7
4.50
326
4.3 XS0607904264
CROATI 6 01/26/24
107.4
108.0
0.37
112.0
97.4
4.82
323
6.3 XS0997000251
REPHUN 4 1/8 02/19/18
103.8
104.0
-0.24
105.4
95.9
2.11
134
1.9 US445545AG19
REPHUN 6 3/8 03/29/21
113.5
113.8
0.09
118.2
82.5
3.43
216
4.3 US445545AE60
REPHUN 5 3/8 03/25/24
110.8
111.4
1.20
114.7
98.7
3.76
214
6.5 US445545AL04
REPHUN 7 5/8 03/29/41
137.4
138.4
1.15
150.3
79.5
4.96
255
12.8 US445545AF36
LITHUN 5 1/8 09/14/17
105.9
106.2
-0.32
113.2
95.1
1.16
51
1.5 XS0541528682
LITHUN 6 1/8 03/09/21
115.6
116.2
0.13
123.9
96.3
2.72
148
4.3 XS0602546136
LITHUN 6 5/8 02/01/22
120.6
121.2
0.38
128.6
101.0
2.78
141
5.0 XS0739988086
LATVIA 5 1/4 02/22/17
103.9
104.3
-0.31
112.8
99.6
1.12
60
1.0 XS0747927746
LATVIA 5 1/4 06/16/21
113.3
113.9
0.09
117.2
90.9
2.50
122
4.7 XS0638326263
POLAND 5 1/8 04/21/21
112.0
112.4
1.40
119.5
97.5
2.58
129
4.5 US857524AA08
POLAND 3 03/17/23
100.1
100.5
2.23
103.6
87.6
2.95
140
6.2 US731011AT95
POLAND 4 01/22/24
6.8 US857524AC63
USD
106.8
107.2
2.68
110.6
98.0
3.00
139
KAZAKS 3 7/8 10/14/24
94.5
95.3
1.05
99.0
84.1
4.60
295
7.1 XS1120709669
KAZAKS 4 7/8 10/14/44
81.6
82.6
-0.36
97.2
75.9
6.22
367
13.7 XS1120709826
RUSSIA 3 1/4 04/04/17
100.4
100.9
0.45
106.9
92.2
2.64
210
1.1 XS0767469827
RUSSIA 4 1/2 04/04/22
100.8
101.4
1.42
114.7
82.0
4.29
290
5.2 XS0767472458
RUSSIA 5 7/8 09/16/43
96.6
97.6
2.06
109.5
76.6
6.09
359
13.0 XS0971721963
TURKEY 7 1/2 07/14/17
107.1
107.5
0.41
123.1
106.5
2.14
150
1.3 US900123BE97
TURKEY 5 1/8 03/25/22
102.7
103.3
0.31
117.5
92.3
4.55
313
5.1 US900123BY51
TURKEY 6 7/8 03/17/36
111.6
112.2
0.92
139.6
99.2
5.86
366
11.0 US900123AY60
TURKEY 4 7/8 04/16/43
87.4
87.9
0.89
105.7
76.6
5.78
329
13.8 US900123CB40
UKRAIN 7 3/4 09/01/21
89.5
90.5
-2.32
98.3
85.7
10.16
885
4.1 XS1303920083
UKRAIN 7 3/4 09/01/27
84.8
85.7
-4.35
97.0
81.2
9.93
812
6.8 XS1303927179
1) Yield/spread - mid market, m/m - month on month, 5-year min and 5-year max, YTM mid - yield to maturity based on mid market price, Bmk - benchmark, Mdur - modified duration, ISIN - international security identification number Source: Bloomberg, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
9
Eurobond market strategy CEE Rating & relative value summary CEE RATINGS DIRECTION S&P
Moody's
Fitch
RBI View2
AA-/stab A+/stab BBB+/neg A-/pos BB+/stab
A1/stab A2/stab A2/stab Baa3/stab Ba1/pos
A+/stab A+/stab A-/stab BBB+/pos BB+/pos
BBB-/stab BB+/stab BB+u/neg BB-/stab BB/neg BB-/stab B+/stab B+/stab B/stab
Baa3/pos Baa2/stab Baa3/neg n.r. Ba1/neg B1/stab Ba3/neg B1/stab B3/stab
BBB-/stab BBB-/stab BBB-/stab BB+/neg BB/neg B+/pos n.r. n.r. n.r.
BBB-/neg BB+/neg B-/stab B-/stab
Baa2/stab Ba1/stab Caa1/neg Caa3/stab
BBB+/stab BBB-/neg n.r. CCC/n.a.
Rating/Outlook CE: CZ SK PL SI HU SEE: RO BG TR1 MK HR RS ME AL BH EE: KZ RU BY UA1
1) Turkey - S&P unsolicited rating, Ukraine - Fitch outlook not applicable, n.r. - not rated, n.a. - not applicable 2) RBI View - possible direction of Outlook and/or Rating change in 3 to 12 months; ; no change; upgrade possible; downgrade possible Source: rating agencies, RBI/Raiffeisen RESEARCH
CE CDS implied rating scale (bp)1
SEE CDS implied rating scale (bp)1 500
300
400 200 300
HU
BBB- upgrade possibility priced in SI
200
BG
100 RO
PL expensive relative to rating
SK
CZ
RS
HR
100
expensive relative to rating
0
0 AA-
A+
A
A-
BBB+
BBB
BBB-
BBB-
BB+
BB+
BB
BB-
1) CE - Central Europe, 5y CDS country spread, 5y CDS spread average for a particular sovereign rating bracket calculated by S&P, country spread above rating spread average relative cheapness, below - relative expensive Source: Standard & Poor's, RBI/Raiffeisen RESEARCH
1) SEE - South East Europe, 5y CDS country spread, 5y CDS spread average for a particular sovereign rating bracket calculated by S&P, country spread above rating spread average - relative cheapness, below - relative expensive Source: Standard & Poor's, RBI/Raiffeisen RESEARCH
EE CDS implied rating scale (bp)1
Local yield premium vs. CDS market (bp)1
1,250
1,200
1,000
800
UA expensive relative to rating 750
400 cheap relative to rating
BY
500
250
0
RU TR
KZ
-400 CZ
0 BBB
BBB-
BB+
BB
BB-
B+
B
B-
1) EE - East Europe (formerly CIS + Turkey), 5y CDS country spread, 5y CDS spread average for a particular sovereign rating bracket calculated by S&P, country spread above rating spread average - relative cheapness, below - relative expensive, Belarus - EMBIG USD spread; Source: Standard & Poor's, RBI/Raiffeisen RESEARCH
10
SK
PL
actual
SI
RO
BG
max
HU
HR
TR
RU
min
1) LCY 5y yield minus 5y UST yield and minus 5y CDS (USD) spread, a lower spread indicates expensiveness of LCY bond vs. same maturity CDS (Eurobond), min/max - 5-year Source: Bloomberg, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
Appendix Summary: Macro data MAIN MACRO DATA & FORECASTS GDP, % avg. yoy Croatia
Czech Rep.
Hungary
Poland
Romania
Russia
Ukraine
Turkey
CPI, Unem% avg. ployment, yoy %
Nominal wages, EUR
Fiscal balance, % GDP
Public debt, % GDP
Export1, % GDP
C/A, % GDP
Ext. debt, % GDP
FXR2 % ext. debt
Import cover, months
2015e
1.5
-0.5
16.2
1058
-5.0
89.9
24.9
4.7
108.9
29.0
9.6
2016f
1.0
1.1
16.0
1061
-4.5
93.1
26.0
1.5
109.5
27.0
8.8
2017f
1.5
1.5
15.8
1070
-4.1
94.9
26.6
1.5
109.8
25.8
8.5
2015e
4.3
0.4
6.5
972
-1.5
40.7
75.0
1.0
65.6
55.4
6.1
2016f
2.4
1.3
6.1
1023
-1.5
40.1
77.4
1.1
63.6
82.0
8.5
2017f
2.4
2.0
5.9
1104
-1.7
40.2
78.9
-0.4
63.4
79.2
8.0
2015e
2.8
0.0
7.0
795
-2.3
75.8
80.3
3.7
104.6
26.5
4.5
2016f
2.2
1.93
6.2
818
-2.23
75.03
81.3
3.7
96.9
26.1
4.0
2017f
2.9
2.73
5.7
833
-2.43
71.53
82.5
3.6
89.8
24.6
3.4
2015e
3.5
-0.9
10.5
939
-3.1
51.9
39.1
-0.1
70.3
29.1
6.1
2016f
3.6
1.3
9.4
950
-3.2
52.9
41.3
-1.2
73.2
24.7
5.1
2017f
3.4
2.0
9.0
1016
-3.2
52.9
40.4
-1.7
73.1
23.5
4.8
2015e
3.7
-0.6
6.8
566
-1.2
38.9
31.6
-1.0
59.3
37.9
7.4
2016f
4.0
-0.3
6.5
619
-3.0
39.7
32.2
-2.5
57.8
33.7
6.1
2017f
3.6
2.7
6.5
668
-3.2
40.4
32.4
-3.3
56.1
33.2
5.7
2015e
-3.7
15.6
5.6
499
-3.6
12.7
25.9
5.0
39.3
73.0
23.3
2016f
-2.0
9.5
6.5
444
-5.5
13.5
27.0
4.6
44.0
80.2
25.9
2017f
1.5
8.0
6.0
522
-3.9
14.0
25.9
4.6
32.2
84.5
21.7
2015e
-10.0
48.5
11.5
172
-4.0
87.0
37.4
-0.8
128.7
11.3
4.3
2016f
1.5
16.0
11.0
n.a.
-3.5
94.0
42.7
-1.0
133.3
13.9
4.7
2017f
3.0
10.0
10.0
n.a.
-2.5
93.0
46.4
-1.2
134.0
14.7
4.6
2015e
3.5
7.6
10.5
n.a.
-1.5
34.0
21.6
-5.0
59.9
26.6
6.5
2016f
2.5
8.1
10.0
n.a.
-1.5
32.0
22.9
-5.7
62.6
24.9
6.0
2017f
3.5
7.0
10.0
n.a.
-1.5
33.0
22.1
-5.6
58.2
25.0
5.7
1) export of goods only 2) FXR - foreign exchange reserves 3) under revision Source: Thomson Reuters, National Statistics, RBI/Raiffeisen RESEARCH
CPI growth forecasts (% average yoy)1
GDP growth forecasts (% yoy) 5
18
4
16 14
3
12
2
10
1
8
0
6 4
-1
2
-2
0 -2
-3 HR
CZ
HU
PL
RO
2016f Source: Thomson Reuters, RBI/Raiffeisen RESEARCH
RU 2017f
UA
TR
HR
CZ
HU
PL
RO
2016f
RU
UA
TR
2017f
1) HU under revision Source: Thomson Reuters, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
11
Appendix Capital flows monitor
The IIF estimates that EMs saw net non-resident portfolio outflows of USD 3.6 bn in January, marking an unprecedented seventh consecutive month of outflows. Renewed concerns about China’s growth outlook seem to have fueled a period of elevated global risk aversion that has weighed on portfolio flows to EMs. The recent reversal has been dominated by equities, while EM bond markets experienced modest inflows for the last three months. The IIF estimates suggest that all EM regions except Latin America have faced outflows in January for the third consecutive month. In Emerging Europe flows are still in the red. However, whilst debt inflows to Poland moderated again, withdrawals from Hungary and Turkey seem to have stopped after a year of outlflows. Source: IIF, RBI/Raiffeisen RESEARCH
Portfolio Debt Inflows to EM (USD bn)1 90
Portfolio Debt Flows (USD bn)1 40
Actual (BoP)
75
30
60
20
45
10
30
0
15
-10
IIF Portfolio Debt Flows
-20 Jan-13
0 -15 2010
2011
2012
2013
2014
2015
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Emerging Europe
Emerging Asia
Latin America
Africa & Middle East
1) net non-resident purchases of EM bonds; EM: IIF group of 30 emerging economies; monthly data Source: IIF, RBI/Raiffeisen RESEARCH
1) net non-resident purchases of EM bonds; EM: IIF group of 30 emerging economies; monthly data Source: IIF, RBI/Raiffeisen RESEARCH
Net non-resident purchases of bonds (USD bn)1
Net non-resident purchases of bonds (USD bn)1
3 9 2
7
1
5 3
0
1
-1
-1 -2 -3 Jan-13
-3 Jul-13
Jan-14
Poland 1) monthly data Source: IIF, RBI/Raiffeisen RESEARCH
12
Jul-14
Jan-15
Czech Republic
Jul-15
Jan-16
Hungary
-5 Jan-13
Jul-13
Jan-14
Turkey
Jul-14 Mexico
Jan-15
Jul-15
Jan-16
South Africa
1) monthly data Source: IIF, RBI/Raiffeisen RESEARCH
Please note the risk notifications and explanations at the end of this document
Risk notifications and explanations Risk notifications and explanations Kindly note that research is done and recommendations are given only in respect of financial instruments which are not affected by the sanctions under EU regulation no 833/2014 as amended, i.e. financial instruments which have been issued before 1 August 2014. We may remind you that the acquisition of financial instruments with a term exceeding 30 days issued after 31 July 2014 is prohibited under EU regulation no 833/2014 as amended. No opinion is given with respect to such prohibited financial instruments.
Warnings Figures on performance refer to the past. Past performance is not a reliable indicator of the future results and development of a financial instrument, a financial index or a securities service. This is particularly true in cases when the financial instrument, financial index or securities service has been offered for less than 12 months. In particular, this very short comparison period is not a reliable indicator for future results. Performance of a financial instrument, a financial index or a securities service is reduced by commissions, fees and other charges, which depend on the individual circumstances of the investor. The return on an investment can rise or fall due to exchange rate fluctuations. Forecasts of future performance are based purely on estimates and assumptions. Actual future performance may deviate from the forecast. Consequently, forecasts are not a reliable indicator for the future results and development of a financial instrument, a financial index or a securities service. Raiffeisen Bank International AG is responsible for the information and recommendations in this publication which are prepared by analysts from subsidiary banks who are listed in this publication or from Raiffeisen Centrobank. A description of the concepts and methods which are used in the preparation of financial analyses can be found at: www.raiffeisenresearch.com/concept_and_methods Detailed information on sensitivity analyses (procedure for checking the stability of potential assumptions made in the context of financial analysis) can be found at: www.raiffeisenresearch.com/sensitivity_analysis The distribution of all recommendations relating to the calendar quarter prior to the publications date, and distribution of recommendations, in the context of which investmentbanking services within the meaning of § 48f (6) Z 6 Stock Exchange Act (BörseG) have been provided in the last 12 months, is available under: www.raiffeisenresearch.com/distribution_of_recommendation Disclosure of circumstances and interests which may jeopardise the objectivity of RBI (as per Sec 48f [5] and [6] of the Stock Exchange Act): www.raiffeisenresearch.com/disclosuresobjectivity
13
Disclosure Bonds
Financial instruments/Company Eurobonds LCY bonds
Date of the first publication 01/01/2001 01/01/1997
Recommendations history: Local currency government bonds (I: no change)* Date of change 09/02/2015
CZ CZK 5y 10y 2y
2y
HU HUF 5y 10y 2y
PL 5y
10y
PLN
RO RU** RON RUB 5y 10y 2y 5y 10y 2y
2y
TR 5y
10y
TRY
Hold Hold Hold Hold Buy Buy Buy Sell Hold Hold Hold Hold Buy Buy Buy Hold Sell Sell Sell Sell Buy Buy Buy Buy
24/03/2015
I
I
I
I
I
I
I
I
I
Sell
28/04/2015
I
I
I
I
I
Hold Hold I
I
I
I
I
I
Hold Hold Hold Hold Hold Buy Hold Hold
15/05/2015
I
Buy Buy
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
02/06/2015
I
Hold Hold
I
Hold
I
I
Hold
I
I
I
I
I
I
I
I
I
I
24/06/2015
I
I
Buy
I
I
I
Sell
I
I
I
Sell
I
I
I
Sell
I
06/08/2015
I
I
Hold
I
I
Sell
I
I
I
Sell
I
I
I
Sell
I
I
03/09/2015
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
22/09/2015
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
04/11/2015
I
I
I
I
I
I
I
I
I
I
17/12/2015
I
I
I
I
I
I
I
Buy Buy Buy
I
I
25/01/2016
I
--
Buy
I
Hold
--
I
Hold
I
--
I
I
--
Hold
I
--
--
11/02/2016
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Hold
--
23/02/2016
I
--
I
I
I
--
I
I
Hold
--
I
I
I
--
I
Hold
I
--
Buy Buy Buy
Hold Hold
I
I
I
I
Hold
I
I
I
I
I
Hold Hold Sell I
I
Hold
I
I
I
I
I
I
I
Hold
I
Buy Buy Buy
Buy Buy
I
Sell Sell Sell Sell
Hold Hold Hold
I
Hold
I
I
Hold
I
Buy
I
I
I
Buy
I
I
I
Sell
I
I
I
I
I
Hold Hold Hold Hold Hold
Buy Buy Buy Buy Buy Buy
I
Buy
I
I
I
Hold
--
--
I
--
I
I
I
I
I
I
I
--
I
Buy
Hold Hold
I
I
Hold Hold I
I
I
* recommendations based on absolute expected performance in LCY; FX vs EUR; 5y segment not covered anymore; ** RU under revision; Source: RBI/Raiffeisen RESEARCH
Recommendations history: Sovereign Eurobonds (I: no change)* BG Date of change 09/02/2015 05/03/2015 24/03/2015 17/04/2015 28/04/2015 02/06/2015 24/06/2015 06/08/2015 03/09/2015 22/09/2015 07/10/2015 04/11/2015 03/12/2015 17/12/2015 18/01/2016 25/01/2016 23/02/2016
EUR Hold I I I I Sell Hold I I I I I I I I I I
HR USD -----------------
EUR Sell Hold I I I I I Sell I I I I I I I Hold I
CZ USD Sell Hold I I I I I Sell I I I I I I I Hold I
EUR Hold I I I I I I I I I I I I I I I I
HU USD Hold I I I I I I I I I I I I I I I I
EUR Buy I Hold I I I I I I I Buy I I I I Hold Buy
KZ USD Hold I I I I I I I I I Buy I I I I Hold Buy
EUR -----------------
LT USD -------Buy I I Hold I Buy I I Hold Buy
EUR Hold I Buy I I Hold I Buy Hold I I Buy Hold I I I
PL USD Hold I Buy I I Hold I I I I I I I I I I I
EUR Hold I Buy I I I I Hold I Buy I I I I Hold I I
RO USD Hold I Hold I I Buy Hold I I I I Buy
EUR Buy I I I I Hold I I I Buy I I
USD Hold I Buy I I Hold I I I Buy I I
I Hold I I
I I Hold I
I I Hold I
* recommendations based on absolute expected performance, i.e. expected spread change; Source: RBI/Raiffeisen RESEARCH
Recommendations history: Sovereign Eurobonds (I: no change)* RU Date of change 09/02/2015 05/03/2015 24/03/2015 17/04/2015 28/04/2015 02/06/2015 24/06/2015 06/08/2015 03/09/2015 22/09/2015 07/10/2015 04/11/2015 03/12/2015 17/12/2015 18/01/2016 25/01/2016 23/02/2016
EUR Sell Hold Buy Hold I I I I I I I Buy Hold I I Buy I
RS USD Sell Hold Buy Hold I I I I I I I Buy Hold I I Buy I
EUR -– – – – – – – – – – – – – – –
SK USD Sell Hold Hold I I Sell I I I I I I I I I I Hold
EUR ----Hold I I I I I I I I I I I I
SI USD -----------------
EUR ----Buy I I Hold I I I I I I I Buy I
TR USD -----------------
EUR Hold I I I Buy I I Hold I Sell I Hold I Buy I I I
UA USD Hold I I I Buy I Hold I I Sell I Hold I Hold I Buy I
EUR Sell I I I Hold I I Sell Hold I I ------
* recommendations based on absolute expected performance, i.e. expected spread change, under revision; Source: RBI/Raiffeisen RESEARCH
14
BY USD Sell I I I Hold I I Sell Hold I I I Sell I I I I
EUR – – – – – – – – – – – – – -
USD Sell I Hold I Buy I I Sell I I I Hold I I I I I
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Bucharest: Raiffeisen Bank S.A. Reinhard Zeitlberger
Tel: +40 21 306 1564
Sofia: Raiffeisenbank (Bulgaria) EAD Yavor Russinov Tel: +3592 9198 5136
Budapest: Raiffeisen Bank Zrt. László Volosinovsky
Tel: +36 1 484 4639
Sarajevo: Raiffeisen Bank d.d. Bosna i Hercegovina Vildana Sijamhodzic Tel: +387 33 287 283
Kiev: Raiffeisen Bank Aval Oksana Volchko
Tel: +38 044 230 0348
Tirana: Raiffeisen Bank Sh.a. Jorida Zaimi
Maribor: Raiffeisen Banka d.d. Simona Vizintin
Tel: +386 2 22 93 159
Warsaw: Raiffeisen Bank Polska S.A. Zuzanna Szatkowska Tel: +48 22 585 2431
Minsk: Priorbank JSC Anna Hmaruk
Tel: +375 17 289 9321
Zagreb: Raiffeisenbank Austria d.d. Wolfgang Wöhry Tel: +385 1 4566 462
Tel: +420 234 40 1728
Tel: +355 4 2381 445 2865
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