FX.co ★ Eurobonds of the Russian Federation have increased, the emerging markets are in a state of tension

In the middle of the current month the RF Eurobond market has demonstrated a positive trend in the segment of countries-analogies against the backdrop of high US treasuries. At that time the value of the Russia 42 and Russia 43 sovereign eurobonds grew up by 100-130 basis points, and the mid-term quotations increased by 55-56 points. Spreads for Russia 23 to UST10 contracted by 10 basis points per day to 331 points.

The pressure connected with a possible rate increase by the Fed affects emerging markets. In the middle of September the tension increased due to the downgrading of Brazil to junk status. Many analysts have previously raised concerns that the country risks losing access to capital market.

In addition, experts estimated that the rating of Turkey would decline, which did occur. The downside risk of investment rating also remains for RSA, only in the longer term. With regard to other countries, for example, Hungary, it can improve its rating by one position till the end of the current year.

Analysts believe that a possible rate increase of the Fed will influence on the funding terms for borrowers of the developing nations more than in 2008. They consider that significant variations in bond market before the announcement of the Fed's decision are not expected, but when correcting the cost of oil, there may be some decline in prices of the RF securities.