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Russian forces have launched a significant wave of drone strikes across Ukraine, heavily targeting energy infrastructure in the southern port city of Odesa. Ukrainian President Volodymyr Zelenskiy stated the attack directly threatens ongoing diplomatic efforts to end the war.

The overnight assault involved some 165 drones deployed against cities from Lviv in the west to Kharkiv in the east. The main focus was Odesa, where Zelenskiy reported on social media platform X that over 50 unmanned aerial vehicles struck energy facilities, injuring dozens.

This strategy appears timed to exploit harsh winter conditions, with freezing temperatures straining heat and water supplies for Ukrainian families. The strikes aim to cripple the nation's already damaged energy system.

Peace Negotiations Falter Amid Airstrikes

The attacks coincide with a series of US-brokered peace talks between Russian and Ukrainian negotiators, part of an initiative sought by President Donald Trump. Zelenskiy argued that the Kremlin's actions are undermining the fragile diplomatic process.

"Every such Russian strike erodes the diplomacy that is still ongoing and undermines the efforts of partners who are helping to end this war," he said, calling for increased pressure on Moscow from the US and European allies. "Without pressure on the aggressor, wars do not stop."

Negotiations, which began last week in the United Arab Emirates, are set to continue but have yet to produce tangible results. The talks in Abu Dhabi have been described as constructive by Trump officials, particularly because the two sides met face-to-face instead of through intermediaries.

Key Sticking Points in Negotiations

Deep disagreements over territorial control remain the primary obstacle. Russia continues to demand that Ukrainian forces withdraw from areas in the eastern Donbas region that its troops have not yet seized. This demand, which covers parts of the Donetsk and Luhansk regions, has been rejected by Zelenskiy.

Despite the deadlock, the Ukrainian leader has pointed to some progress, especially regarding the establishment of security guarantees from the United States.

Why Odesa Remains a Critical Target

Odesa and its surrounding region host vital Black Sea port infrastructure that is essential for Ukraine's grain exports. This strategic importance has made the city a frequent target of Russian attacks since the full-scale invasion began in February 2022.

According to the national grid operator Ukrenergo, the latest strikes damaged the region's power infrastructure, triggering local blackouts. These power failures add to more than 500 weather-related outages across the country. However, no damage to the port facilities themselves was reported.

Saudi Arabia's state-owned oil giant, Aramco, has successfully issued a $4 billion bond, marking its first entry into the debt market this year. The move comes as global oil prices remain weak, hovering in the low $60s per barrel range.

The company, which is the world's largest crude exporter, initially announced its plan to issue U.S. dollar-denominated international bonds under its Global Medium Term Note Programme, stating the final amount would depend on market conditions.

Overwhelming Demand Signals Investor Confidence

The offering ultimately raised $4 billion through a four-tranche bond that attracted more than $21 billion in orders from investors.

This exceptionally high demand allowed Aramco to secure more favorable terms. According to market sources, the company was able to offer lower yields compared to benchmark U.S. Treasuries than it had initially guided, reducing its borrowing costs.

A Pattern of Increased Borrowing

While this is Aramco's first bond sale of the year, it represents the company's second debt issuance in the last five months, highlighting a growing trend. In September 2025, the oil firm offered Islamic bonds, known as sukuk, with five and ten-year maturities.

The turn to debt markets follows a period of financial pressure caused by declining oil prices. Lower prices have already reduced Aramco's cash flows, with Q1 figures showing a decline and Q2 results revealing an even larger drop in both cash flow and profits as prices slumped.

Kingdom's Finances Strained by Oil Price Slump

Aramco's recent bond sale is part of a broader pattern of increased borrowing by Saudi Arabia as the Kingdom grapples with the financial impact of lower oil revenue. This trend suggests that the country's finances are under strain.

Other recent debt activities include:

• Saudi Arabia: The Kingdom sold $5.5 billion in Islamic bonds, which received orders totaling $17.5 billion.

• Public Investment Fund (PIF): The nation's sovereign wealth fund raised $2 billion by selling 10-year dollar bonds to help finance its investment plans.

Saudi Arabia’s budget deficit expanded last year as oil prices have remained well below the estimated $90 per barrel the Kingdom needs to balance its budget, prompting both the government and its flagship company to increasingly tap debt markets for funding.

Germany has successfully raised €6.5 billion from its first-ever sale of new 20-year government bonds, attracting a near-record flood of investor orders that signals intense appetite for sovereign debt.

The offering for the new May 2047 note drew orders exceeding €72 billion, just shy of the national record set for a 30-year bond two years ago. According to sources familiar with the deal, the final price was set at two basis points over comparable bonds, slightly tighter than the initial guidance.

This landmark sale is part of a broader government strategy to increase its debt offerings and expand its range of maturities. The move follows the loosening of strict borrowing limits last year, an effort aimed at revitalizing Europe's largest economy.

A Global Surge in Bond Appetite

The successful German offering highlights a historically busy start to the year for global bond sales, as borrowers capitalize on strong investor demand. Other European nations, including Italy and Portugal, have also recently seen record-breaking orders for their debt issues.

Financial authorities anticipated strong interest, partly due to an overhaul of the Dutch pension system—the largest in the region—which has dampened appetite for longer-term 30-year bonds and shifted focus to intermediate maturities.

"It's been a very good start of the year for all these syndications," said Evelyne Gomez-Liechti, a strategist at Mizuho International plc. "Investors are happy to have German risk at current yield levels."

The Lure of the 20-Year Yield

A key driver of the high demand is the attractiveness of current yields. German 20-year yields are trading around 3.39%, close to a 14-year high reached last month.

Furthermore, this particular bond maturity is considered relatively cheap. When compared to its 10- and 30-year peers, the 20-year sector is trading near its most affordable level in over a decade, making it a compelling opportunity for investors.

Figure 1: The spread between German 20-year bonds and their 10- and 30-year counterparts has widened significantly, making this maturity historically attractive for investors ahead of the offering.

While Germany has occasionally sold debt with this maturity in the past decade, those were bonds originally issued with longer terms that had shortened over time. This sale marks the first new issuance specifically targeting the 20-year segment.

"The 20-year segment is being developed to meet demand," noted Tammo Diemer, co-director of Germany's finance agency, when the plan was first announced last month.

Lessons from the US Experience

The decision to launch a new 20-year bond comes with historical context. Five years ago, the United States struggled to find consistent buyers when it reintroduced its own 20-year bonds. A notably poor auction in May of that year even triggered a wider market selloff.

Steven Mnuchin, who served as Treasury Secretary under President Donald Trump and brought the bond back, later admitted the move was "costly to the taxpayer."

However, market appetite appears to have evolved. A recent US sale of 20-year bonds was oversubscribed by the second-highest margin on record, indicating that investor demand for this maturity is improving.

Syndication Strategy and Market Health

Germany opted for a debt syndication, a method that is typically more expensive than a conventional auction but allows governments to raise large sums quickly while diversifying their investor base. The bookrunners for the deal included Barclays plc, BNP Paribas SA, Citigroup Inc, Deutsche Bank AG, JPMorgan Chase & Co, and Morgan Stanley.

The strong demand for German debt was not limited to this offering. On Tuesday, the finance agency also sold new two-year notes through a standard auction, which was similarly met with robust investor interest.

Source: Euronews

The Czech National Bank (CNB) may consider a small interest rate cut at its upcoming policy meeting, driven primarily by economic shifts happening outside the country, according to Vice-Governor Jan Frait.

In an interview on Monday, Frait suggested that external pressures, such as potential rate cuts by other major central banks, are now a central consideration for the CNB's board.

"In my view the external forces are exactly what the meeting will be and should be about," Frait said, describing them as a "very, very strong set of factors."

Global Headwinds vs. Local Economic Data

This focus on international trends marks a significant pivot, as the Czech Republic's domestic economy shows signs that would typically support maintaining higher interest rates. Frait acknowledged that a domestic recovery, a tight labor market, rising wages, and a loose fiscal policy all argue against monetary easing.

"Labour market and wage developments were truly an argument for maintaining relatively higher interest rates," he stated.

Despite these strong local indicators, the vice-governor projected that rates would likely remain stable or fall by a maximum of 50 basis points over the course of the year.

CNB's Shifting Policy Stance

The central bank's last policy move was in May 2025, when it cut its main repo rate by half to 3.50% before pausing.

Initially, the CNB had signaled that its next adjustment would likely be a rate hike. However, the board altered its perspective in December, changing its official risk assessment for meeting its 2% inflation target from "inflationary" to "neutral." This adjustment opened the door for discussions about potential rate cuts.

The bank’s next meeting on February 5 will be crucial, as board members will review new economic forecasts alongside their rate decision. Frait underscored the importance of pre-emptive policymaking but did not reveal how he intends to vote.

Prime Minister Narendra Modi announced an ambitious plan to attract US$100 billion (RM395.45 billion) in investment into India's oil and gas sector by the end of the decade. Speaking via video at the India Energy Week conference, Modi outlined a strategy centered on expanding drilling into previously restricted territories.

To support this push, India also plans to increase its refining capacity by one million barrels per day, reaching a total of six million. This move signals a long-term commitment to domestic energy processing and provides a stable demand outlook for potential explorers.

Tackling India's Heavy Reliance on Foreign Oil

The new initiative aims to address a long-standing economic vulnerability. For decades, India's own oil production has failed to keep pace with its surging demand, forcing the country to import 90% of its crude oil and half of its natural gas needs.

This heavy reliance on foreign energy is a significant drain on the nation's foreign exchange reserves. In December alone, oil and gas imports comprised 17% of the total value of goods shipped from overseas.

Currently, India's domestic oil output averages just 550,000 barrels a day—comparable to the combined production of OPEC members Congo and Gabon, but only a small fraction of the country's total consumption.

A New Frontier: Opening Vast Areas for Exploration

To reverse this trend, India is opening nearly one million square kilometers of previously ring-fenced areas to oil and gas exploration. This new territory is in addition to the 170 blocks already available for drilling.

A key component of this strategy is the National Deepwater Exploration Mission, which was launched last August. The mission's goals include:

• Unlocking between 600 million and 1,200 million tonnes of oil and gas reserves.

• Drilling 40 new wildcat wells to discover new fields.

• Doubling the country's reserves by 2032.

• Tripling domestic output by 2047.

• Ultimately slashing import dependency by 88%.