Issuance from Islamic Development Bank; Russian bonds strengthen slightly; sukuk perform

By Christine Van Dusen

Atlanta, March 5 – Saudi Arabia’s Islamic Development Bank sold notes on Thursday as Russian bonds opened slightly stronger after coming under pressure from the possibility of increased sanctions from Europe.

The United States, which recently announced an extension of sanctions against Russia, is “working closely with Europe on deeper sectoral sanctions,” a London-based analyst said.

Russian bonds were also reacting to oil price declines on Wednesday, he said.

Paper from Turkey opened mostly unchanged on Thursday, following a weak Wednesday session that stemmed from the devaluation of the lira.

In other trading on Thursday morning, Croatia’s new issue of 3% notes due 2025 that priced at 97.845 to yield mid-swaps plus 255 basis points was spotted near reoffer, he said.

Spreads for Middle Eastern bonds started out Thursday mostly flat, a trader said, after investment grade names tightened on Wednesday between 1 bp and 4 bps.

Later in the session, sukuk were holding in well, another trader said.

“Some other markets are a little heavy,” he said. “The recent Abu Dhabi Commercial Bank 2020s are doing what these issues normally do, and that’s widen in the initial week of trading. Of course, over time, it should be fine.”

Euro-denominated notes from Gulf region were particularly popular, he said.

Meanwhile, Asian bonds put in a mostly subdued session on Thursday, with high-grade cash bonds closing unchanged, a London-based trader said.

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