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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Oracle who wrote (6780)	8/17/1998 8:21:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Emerging debt slides on surprise actions by Russia Reuters, Monday, August 17, 1998 at 19:05 By Hugh Bronstein NEW YORK, Aug 17 (Reuters) - Emerging market debt prices took it on the chin Monday, after Russia surprised investors by effectively devaluing the rouble and declaring a debt moratorium in an attempt to restore confidence in its rickety financial system. But in the absence of reform measures advocated by international lenders, investors fled Russian and other emerging debt for higher ground. "This brings (President Boris) Yeltsin's reform process into disrepute, because the only success he's had to date has been bringing down inflation and holding the exchange rate steady," said Jeffrey Woodruff, Russia analyst at BankBoston. Russia PRIN paper <RUSPRIN=RR> was down 9-5/8 to bid 22, Brazil C bonds <BRAZILC=RR> were down 4 to bid 65-1/2, and Argentine PAR bonds <ARGPAR=RR> were down 2-1/4 to bid 70-5/8. "These prices are being driven down by fear," said Siobhan Manning, Latin American analyst at Paine Webber. "People are afraid there will be a domino effect from Russia to China, then throughout Asia and on to Latin America." Drastic measures announced by the Russian government and central bank, including halting some foreign debt repayments for 90 days, sparked queues outside some foreign exchange booths as Russians sought to change roubles into dollars. Government officials were expected to release details of the debt moratorium on Wednesday. "For the Russian government to announce a devaluation and a debt moratorium on Monday and make investors wait until Wednesday to release the details shows a lack of financial sophistication," Manning said. "This creates unnecessary uncertainty and erodes confidence," she said. On Friday, Russian legislators are expected to debate measures intended to crack down on tax evaders. What's more important, according to Woodruff, is the fact that the Duma, Russia's lower house of Parliament, does not plan on Friday to take up two tax increase measures that it had rejected last month, after the increases were called for by the International Monetary Fund (IMF). U.S. Treasury Secretary Robert Rubin and IMF Managing Director Michel Camdessus on Monday called on Russia to take concrete steps to reform its economy. "This entails adopting the two remaining IMF measures," Woodruff said. Prices throughout the market will not recover until people understand exactly which debt payments Russia will not make, or until the market gets details from the Duma outlining the government's financial game plan, Woodruff said. Copyright 1998, Reuters News Service