Russia hopes to make an important step toward entering international financial markets by launching its first Eurobond issue, for between $300 million and $500 million, in October this year. The announcement was made on July 30 by Deputy Finance Minister Mikhail Kasyanov following a meeting in Frankfurt with eighty German members of the 600-strong London Club of creditor-banks. Kasyanov said the bond, the first of its kind since before the 1917 Revolution, would be denominated in dollars. (Itar-Tass, Xinhua, July 30; Financial Times, July 31)
Kasyanov was in Germany to discuss the rescheduling of Russia’s $35 billion debt to the London Club. If that deal is reached, Russia’s international financial standing will improve, making the Eurobond issue feasible. Kasyanov said he hoped agreement with the London Club would be completed by late autumn. Russia is seeking postponement of repayments of the principal of its debt and also some postponement of interest payments; the rescheduling would last 25 years, with a grace period of seven years. Russia and the London Club reached agreement last November, but the details still remain to be thrashed out. Russian negotiators had hoped to get the deal sewn up before now, but a new monkey wrench has been thrown in the works by the IMF’s decision to withhold the July tranche of its extended Fund facility loan to Russia. The London Club is likely to make Russian compliance with IMF conditions a precondition of its own agreement.
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