The cost of the Russian five-year CDS on Thursday, August 11, increased by 14 b.p. rising to 228 points, after reports that the President of Ukraine Petro Poroshenko ordered to bring in the enhanced combat readiness of all units on the border with Crimea.
In early August, the cost of CDS (credit default swaps, the cost of this paper shows the level of risk of default of a particular country) in Russia was on a two-year low of 214 points. “What happened on Thursday, the growth is clearly linked with the exacerbation of geopolitical tensions over Crimea”, — said the chief expert of center for economic forecasting of Gazprombank Yegor Susin. He believes that investors don’t expect that the situation will unfold in a serious conflict between the two countries. “Otherwise, the cost of risk in Russia has grown more noticeable, until everything looks like a local correction” — the expert believes.
However, the ruble is practically not reacted to the events in the Crimea. Today at auction Moscow stock exchange the dollar has lost 51 kopecks, down to 64.35 RUB “the Market responds to rising oil prices”, — says the chief economist of the Eurasian development Bank Yaroslav Lissovolik. The price of a barrel of Brent crude rose 5%, topping $46. The expert notes that with such a significant strengthening of oil prices, the ruble could show a more significant increase, but probably prevents external news background.
The stock market is also growing on the background of rise in oil prices. The stock market index MICEX increased by 0.49% to 1952,18 points. The price of Russian Eurobonds edged up a bit “2026” is trading with a yield of 3.97% per annum, the cost of paper decreased from 106,68 to 106,43%.
The Ukrainian hryvnia has responded to the escalation of the conflict by the decline in the dollar. The U.S. currency rose today from 24.77 to 24.92 hryvnia. Also, according to the Agency Bloomberg, the yield of Ukrainian Eurobonds maturing in 2026 rose to the highest since Feb 23 b.p. to 8.2%. “Most hope that Russia has not enough will to unleash a full-fledged war with Ukraine with oil at $44”, — quotes Agency the words of the trader on the bonds of the company Investment Capital Vitaly Sivaca.