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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: Real Man who wrote ()6/18/1998 2:03:00 PM
From: Real Man   of 1301
 
MOSCOW, June 17 (AFP) - Russia's government cancelled two
planned bond auctions on Wednesday arguing that yields demanded by
dealers were exaggerated, traders said.
The government, which auctions bonds weekly to finance a
mounting volume of maturing government paper, cancelled auctions of
a six-month and one-year bond, but proceeded with a third auction of
three-year paper, they said.
Traders said the cancellations indicated that the government,
currently struggling amid a chronic cash crisis, nonetheless had
enough funds in its threadbare public purse to honour maturing bonds
without turning to the market for a fresh inflow of capital.
"The ministry of finance said it didn't find the current yield
level reasonable for placing paper," said Maxim Safonov, a fixed
income dealer with ING Barings in Moscow. "But it pushed on with a
third auction of three-year paper and demand was concentrated lower
than the 60 percent refinancing rate level."
Bond yields are a key thermometer of Russian economic health.
Investor concern over a hole in the budget and concomitant mounting
debt has translated into a mass exodus from the bond market, sending
yields to astronomical levels at which it becomes extremely
expensive for the government to issue further paper.
Interfax reported Wednesday that some 192 billion rubles worth
of bonds (30 billion dollars) are due to mature this year. Total
government spending including debt servicing was revised last month
to 432 billion rubles (70 billion dollars).
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