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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Haegin who wrote (203)	6/8/1998 5:40:00 AM
From: Thomas Haegin	Respond to of 1301

Repost: FITCH IBCA LOWERS RUSSIA'S FOREIGN CURRENCY RATING TO 'BB' > >ÿ Futures World News - June 05, 1998 11:38 > >ÿ London-June 5-FWN--FITCH IBCA SAID TODAY IT HAS CUT Russia's long-term foreign currency rating to 'BB' and placed it on RatingAlert negative. > >ÿ The short-term foreign currency rating remains unchanged at 'B'. The new rating applies to all senior unsecured sovereign debt issued by the government of the Russian Federation and places a ceiling on the long-term foreign currency rating of Russian issuers, the international ratings agency said. > >ÿ "The bold and determined defense of the ruble by the Russian authorities has diminished the immediate risk of a liquidity crisis. Though Russia's vulnerability to rollover risk was previously identified by the agency, the latest and third episode of financial volatility since October 1997 has heightened this risk and influenced the agency's decision to downgrade," Fitch IBCA said. > >ÿ Fitch noted if the Russian authorities implement the International Monetary Fund (IMF)-supported package of expenditure cuts and revenue-raising measures with the same determination shown in defending the ruble, there will be a dramatic easing in the country's fiscal crisis. > >ÿ But against the backdrop of the increased cost of domestic and external public debt, lower world oil and commodity prices, and a stalled economic recovery, the risk of slippage on the fiscal targets agreed with the IMF is consequently greater. The assignment of a RatingAlert negative to the lower rating of 'BB' reflects this concern. > >ÿ Fitch IBCA has identified three triggers for the lifting of the rating alert: > >ÿ --Given the fragility of investor confidence in the Russian government's capacity and willingness to tackle the fiscal crisis that is the underlying cause of pressure on the ruble, the agency believes that additional external financial support is still required despite the recent recovery in confidence. A mechanism for providing the Russian authorities with short-term external liquidity would shore up confidence in the ruble and provide the government with the time it needs to demonstrate that it is effectively implementing the IMF-supported fiscal package. > >ÿ --Ministry of Finance treasury control of public spending must be extended across all the federal government financed expenditure programs and budgetary units, including the so-called Power Ministries (Defense, Security, and Interior). > >ÿ --Decisive and public action must be taken against tax delinquents in order to send a powerful signal that non- payment of taxes will no longer be tolerated. > >ÿ A key judgement that underpins Fitch IBCA's sovereign rating is the level of political support and access--unique among emerging economies--that Russia enjoys from the international community, which mitigates the underlying credit risk. The agency continues to stand by that judgment in light of recent statements by President Clinton and other Group of Seven leaders, Fitch IBCA noted. > -eom-

To: Thomas Haegin who wrote (203)	6/8/1998 5:42:00 AM
From: Thomas Haegin	Respond to of 1301

Repost: Tatneft & Siberian Oil Cut to 'BB' RatingAlert Negative: Fitch IBCA ÿ PR Newswire - June 05, 1998 12:17 ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ AO Tatneft and AO Siberian Oil Company Downgraded;ÿÿÿ ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Placed on RatingAlert Negative ÿÿÿÿÿ LONDON, June 5 /PRNewswire/ -- In conjunction with its downgrade of the Russian Federation's Long-term foreign currency rating to 'BB' and placing it on RatingAlert negative, Fitch IBCA also downgrades the Long-term rating of the Russian oil companies it rates from 'BB+' to 'BB' and places them on RatingAlert negative.ÿ The companies affected are AO Tatneft, Tatneft Finance plc and AO Siberian Oil Company. AO Tatneft is one of Russia's largest upstream oil companies, producing 23 million tonnes of crude oil per year. The ratings for AO Tatneft and for Tatneft Finance plc, the special purpose vehicle guaranteed by AO Tatneft, remain constrained by the sovereign foreign currency rating of the Russian Federation. AO Sibneft is one of Russia's major vertically integrated oil companies and the seventh largest producer of crude oil in Russia, with output level of 18.2 million tonnes and a refining capacity of 19.5 million tonnes per year in 1997.ÿ The rating for AO Sibneft remains constrained by the sovereign foreign currency rating of the Russian Federation. The Long-term rating of 'BB' cannot be applied directly to debt securities issued by AO Sibneft or by its subsidiaries.ÿ In assigning such individual security ratings, structural issues must be taken into account, which include potential structural subordination of the debt to other capital providers and also the location of that debt relative to operating assets. SOURCEÿ Fitch IBCA, Inc.ÿÿÿÿ -0-ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 06/05/98 /CONTACT:ÿ Larissa Malycheva or Richard Hunter, both of Fitch IBCA, 44

To: Thomas Haegin who wrote (203)	6/8/1998 5:43:00 AM
From: Thomas Haegin	Respond to of 1301

Repost: Sberbank Downgraded To 'BB'; on Rating Alert Negative By Fitch IBCA Rating Downgrade for Russia's Sberbank - Fitch IBCA Financial Wire - ÿ PR Newswire - June 05, 1998 12:06 ÿÿÿÿ LONDON, June 5 /PRNewswire/ -- Following the decision taken to downgrade the Long-term foreign currency rating of the Russian Federation and place it on RatingAlert negative, Fitch IBCA has also downgraded the Long-term rating of The Savings Bank of the Russian Federation (Sberbank) from 'BB+' to 'BB', and placed it on RatingAlert negative. The bank continues to be rated at the sovereign ceiling, reflecting its majority ownership by the state and importance to the banking system. SOURCEÿ Fitch IBCA, Inc.ÿÿÿÿ -0-ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 06/05/98 /CONTACT:ÿ Jenny Alexander or Natasha Chubar, London, both for Fitch, +44

To: Thomas Haegin who wrote (203)	6/8/1998 5:46:00 AM
From: Thomas Haegin	Read Replies (1) \| Respond to of 1301

Repost: Yeltsin tells Russians to pay taxes ÿ United Press International - June 05, 1998 10:27 ÿÿÿ MOSCOW, June 5 (UPI) - Russian President Boris Yeltsin took to the airwaves to tell his countrymen to pay their taxes or face the consequences. ÿÿÿ Explaining last week's stock market crash in Russia, which was caused in large part by the state's failure to collect taxes and increase revenues, Yeltsin warned his citizens the government would start cracking down on tax dodgers. ÿÿÿ Yeltsin said failure to pay taxes is affecting everyone, and criminal charges will be filed against well-known tax cheats as a deterrent to others. ÿÿÿ Yeltsin said: ''Russia's financial crisis is threatening to destabilize the ruble, which would lead to higher prices and a higher cost of living.'' ÿÿÿ He said: ''We cannot allow this to happen, we must learn to live according to our means.'' ÿÿÿ Yeltsin admitted to the nation ''we have ourselves to blame for he crisis,'' adding that tax receipts have to rise to cut the budget deficit. ÿÿÿ He said: ''The government exists on the money paid by taxpayers, and has a right to expect citizens to act responsibly and pay their taxes. ÿÿÿ Yeltsin said failure to act quickly will lead to the return of Soviet-style ration coupons and shortages for basic items. ÿÿÿ He said: ''We are fed up with this system,'' urging ordinary Russians to pay up and help the state in its hour of need. ÿÿÿ Russia's new tax chief Boris Fyodorov (''FYOH-dah-rawf'') says a list of 1,000 wealthiest Russians is being drawn up and they will be monitored closely by the tax authorities. ÿÿÿ Fyodorov told the Kommersant newspaper today: ''Famous people should set an example for ordinary citizens,'' indicating a crackdown on show-business personalities and possible show trials of bankers avoiding taxes were imminent. ÿÿÿ Russian tax inspectors say just over 4 million tax returns were filed this year, out of a population of almost 150 million. ÿÿÿ Russia has no culture of paying taxes to the state, and the tax police expects the crackdown will have a limited effect, with a figure of 20 million tax-payers mentioned as the target for the end of this year. ÿ -- ÿÿÿ Copyright 1998 by United Press International. ÿÿÿ All rights reserved. ÿ --