GOOD RESULTS FOR THE FIRST RUSSIAN EUROBOND ISSUE.

Russia on November 21 launched its first international issue since the Bolshevik revolution. Demand was high and bids totaled $2 billion. A total of $1 billion were placed at 5 years, with a yield of less than 10 percent. (IPS, November 22) The Russian minister of finance, Aleksandr Livshits, declared on November 22 that the Russian government aimed to keep yields low by restricting the quantity of bonds offered. The main purchasers were the U.S. (41 percent), South Korea (29 percent) and European countries (30 percent). Livshits and Prime Minister Viktor Chernomyrdin said that the reaction to the issue demonstrated the confidence of foreign investors in Russia’s economic prospects. (Interfax, November 22) The appeal of the eurobonds to investors, both national and foreign, has been increased by the decision to make them tax-free. The positive results of the eurobond issue will allow the Russian government to reduce yields in the domestic bond market. (Interfax, November 22)

It is expected that the successful eurobond issue will facilitate the entry of Russian companies, as well as local and regional authorities, into world financial markets. Gazprom, the Russian gas giant, has expressed an interest in tapping into the eurobond market. The city of Moscow intends to launch an issue for up to $500 million by December as part of an effort to raise $1.5 billion from domestic and foreign sources. St. Petersburg has similar plans. Livshits has stated that the government should allow regional and municipal bonds, but under regulated conditions. Neither Moscow nor St. Petersburg currently have credit ratings. (IPS, Interfax, November 22)

The euphoria generated by the enthusiastic acceptance of the Russian eurobond issue did not lead Moscow to disregard the importance of good relations with the IMF. Returning from the New York presentation of the eurobonds, First Deputy Prime Minister Vladimir Potanin declared that the money raised is no substitute for credit expected from the IMF, which has been delayed because of tax-collection problems. (Interfax, November 22) According to Livshits, the success of the issue will not have a direct impact on current negotiations with the IMF, but it should nevertheless demonstrate to IMF experts the real situation in the Russian economy. (Itar-Tass, November 22)

Russia to Repay Tsarist Debts.