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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Real Man who wrote (986)	4/20/1999 9:40:00 AM
From: Paul Berliner	Read Replies (2) of 1301

B] EBRD: Kasyanov: Russia cannot pay MinFin-3 principal payments Updated Tues Apr 20, 1999 11:55 GMT --Kasyanov: Sees Russia-IMF deal by end-week or start next wk --Russia Kasyanov: Min Fin coupon payments under discussion --Kasyanov: Russia Min Fin 6/7 will be paid on time By Anna Willard, Bridge News London--Apr 20--Russian deputy finance minister Mikhail Kasayanov said todaythat Russia cannot afford the principal payments on its third tranche of MinFinbonds, which is due May 14. * * * He told journalists at a press conference at the annual general meeting ofthe European Bank for Reconstruction and Development: "Unfortunately thesituation is that it will not be possible for Russia to pay MinFin tranche-3bonds. What we are discussing now is how to make clear to investors what willhappen with interest payments." He added that the principal payments on MinFin bond tranches 6 and 7 will bepaid on time on the due dates. He repeated that this is because MinFin tranches6 and 7 count as new Russian debt, which Russia fully intends to service. Theother MinFin tranches count as previous Soviet debt. He also said that the reason that so much attention was being paid to theinterest payments is because of the issue of cross default on other bonds. "Wewant to pay the interest so that creditors will accept it as goodwill and thennot use their rights to call a cross default--which would mean that all trancheswould have to be restructured," he explained. He said that since August last year the government had run up arrears ofaround $3 billion with the London and Paris Clubs. Of this approximately $2billion is arrears to the Paris Club and the rest is an unpaid cash payment onPRINs. Kasyanov said that it was still to premature to give details on Paris andLondon Club discussions, but said that a meeting with the Paris Club would beheld at the end of May. "We are concentrating on giving creditors as muchinformation as we can so that the overall picture can be addressed by extensivedialog," he said. He hinted that this could include discussion of debts due inthe next year as well. He said that he could not give any concrete figures on the amount that isbeing discussed for a write-off as it would depend on external factors such ascommodity prices and revenue collection. On this subject he said that the issueis to establish a sustainable debt profile. Kasyanov said that he expected a deal with the International Monetary Fundto be signed by the end of this week or the beginning of next week with boardapproval hoped for in the first half of May. He confirmed that Russia has beenmaking weekly payments to the IMF and regular payments to other IFCs. On the subject of government T-bills (GKOs) he said that only 40% offoreigner holders had applied for the government-led swap. The deadline forapplication is today. He said that banks that had already applied for the swapwould not be made to feel that they had done the wrong thing when details for those that did not apply arereleased. He said he appreciated that the finance ministry had not provided thedetails as promised and realizes that this creates a problem between banks andtheir clients. He said that the ministry of finance was ready to discuss the Credit SuisseFirst Boston proposed Nikitskiy fund, but not as an alternative to thegovernment swap. Kasyanov added that he did not think that a list of securities should bereleased (of companies that foreigners will be allowed to use their rubleproceeds in). End

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