The yield on Russia’s 38 billion rubles ($1.3 billion) of bonds due 2021 climbed for the first day in three as oil, Russia’s chief export earner, headed for a third weekly decline in New York. The yield on the ruble-denominated OFZ notes jumped 20 basis points, or 0.2 of a percentage point, to 8.07 percent as of 12:21 p.m. in Moscow, the first rise in three days. OFZs due 2016 yielded three basis points less than yesterday at 7.73 percent. Oil dropped in New York on concern volatility in global financial markets will worsen an economic slowdown. Crude for September delivery dropped 0.7 percent to $85.16 a barrel. “Russian and Commonwealth of Independent States bonds are under pressure amid high global volatility,” VTB Capital analysts in Moscow wrote in an e-mailed research note. “This is clearly not the best environment for the risk-on trade.” The ruble was 0.2 percent stronger at 29.4175 per dollar, bringing its total drop against the greenback this week to 3.7 percent. A close at that level would be the worst weekly drop since July 2009. Russia’s currency was 0.5 percent stronger at 41.81 per euro, leaving it up 0.4 percent at 34.9941 versus the central bank’s target dollar-euro basket. Three-month implied volatility in the ruble’s level against the dollar was little changed at 16 percent, after climbing 4.43 percentage points so far this week. Non-deliverable forwards, which provide a guide to currency movement trends and enable companies to hedge against them, show the ruble at 29.7408 per dollar in three months, compared with 29.8580 yesterday. Extra Yield The extra yield investors demand to hold Russian government dollar debt rather than U.S. Treasuries rose four basis points to 297, according to JPMorgan Chase & Co.’s EMBI Global indexes. The difference rose 17 basis points to 449 for Kazakhstan and fell three basis points to 592 for Ukraine. The cost of protecting Russian debt against non-payment for five years using credit-default swaps rose one basis point to 220, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. That’s the highest level since May 2010, based on closing prices, the data show. The swaps have risen every day since July 28, the longest rising streak since at least October 2004, when Bloomberg started tracking the data. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements. To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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