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

To: Real Man who wrote (392)	7/31/1998 12:38:00 AM
From: Real Man	Read Replies (1) \| Respond to of 1301

Special Section: Markets ) Former IMF Official: Get Bullish on Russian Debt LONDON -- (Reuters) A top emerging markets specialist and former IMF official on Wednesday said the West would stand by Russia and that now was the time to buy short-dated Russian debt. David Folkerts-Landau, a former senior International Monetary Fund official who joined Deutsche Morgan Grenfell last year, said in a conference call to investors that Russian GKOs (t-bills) were among the best buys around. "Looking at the yields currently available, particularly at the short end, I do not see a more profitable opportunity than investing in Russian GKOs for the rest of the decade," said Folkerts-Landau, global head of emerging markets at the German bank. Average Russian t-bill yields on Wednesday were around 63 percent, down from around 75 percent. "These are quite extraordinary -- the real returns that can be had -- if one buys into the basic story that there is a general interest within the G7 and the Fund to support Russia." Folkerts-Landau, for his part, did buy into this story, although there may be periods of investor uncertainty. "The money will be forthcoming," he said. "My sense is that when push comes to shove, the money will be made available as we indeed saw two weeks ago." The IMF two weeks ago approved $11.2 billion in funds for Russia as part of an overall package worth $22.6 billion. He said there would also be some uncertainty in September when the IMF was due to release the next installment of its loan. While Russia may have trouble meeting all of the IMF conditions, Folkerts-Landau said: "To deny Russia the first disbursement under the IMF program would be very difficult to justify." He said the Fund may be tougher in a second review in December. But he added: "My view remains that the multilaterals and the G7 will backstop Russia and provide the finance that is necessary to keep the Russian financial system reasonably stable and to keep the ruble from devaluing precipitously." Folkerts-Landau also said Russia's macroeconomic backdrop was positive and that recent market sentiment was "completely disconnected" from the underlying fundamentals. "It is very hard to build a case that Russia's macroeconomy is about to self-destruct which is the impression one would have gotten on Friday and Monday." Prices on Russian assets had fallen sharply over those two days, wiping out a large portion of gains scored on the back of the $22.6 billion IMF-led bailout package announced a little over two weeks ago. He said issues which still could concern investors included Russia's need for tax reform and the possibility of political machinations. But he said Russian President Boris Yeltsin had shown he was able to manage the Duma. ( (c) 1998 Reuters)