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To: goldsnow who wrote (16665)	8/26/1998 7:23:00 PM
From: Alex	Read Replies (1) \| Respond to of 116762

DEUTSCHE BANK ANALYSTS CONFIRM STREET'S WORST RUSSIA FEARS By Isobel Kennedy and Joseph Plocek ÿÿÿÿÿWASHINGTON (MktNews) - Analysts at Deutsche Bank told investors Wednesday that losses totaling US$6 to $8 billion could result from the Russia debt rescheduling and to look to Brazil as the next international trouble spot. ÿÿÿÿÿBrazil is said to have currently about $360 billion of debt outstanding. Foreign investors hold as much as 25% of that paper. Should IMF aid be needed down the road, in any restructuring there will be a significant write down of foreign claims. ÿÿÿÿÿOfficial IMF statistics on Brazil confirm the magnitude of the problem. They show US$71.4 billion in reserves excluding gold at May 31, $321 billion in all credit market debt at year-end 1997, and $126.7 billion in government securities as of May 31. ÿÿÿÿÿRegarding the Russia situation, Deutsche Bank analysts in a conference call said the Russian restructuring plan was at the direction of the IMF and has "changed the rules of the game" as far as global borrowing is concerned. In any future IMF bailout packages, the Russian experience has set a precedent in that foreign investors will now be expected to take a significant hit. ÿÿÿÿÿThe analysts further estimated Russia's remaining reserves at $5-6 billion excluding gold, versus $12 billion in the Spring. Russia restructuring expected to produce losses for investors of 60%-80% of financial investment, losses that could total $6 to $8 billion. Forward contracts in rubles also are expected to be repriced, but it is unclear at what level as the suspension of trading in the ruble will make pricing difficult. ÿÿÿÿÿThe Russia plan had the objectives of lowering the value of the Russian currency, altering the debt servicing to alleviate budgetary pressures, and being "market friendly." The analysts intimated it fails in the last objective, in part because most of the rescheduled debt will not be traded. ÿÿÿÿÿDetails of the rescheduled Russian debt should include a 5% cash payout, and 95% of face value split equally into 3-, 4-, and 5-year issues. Only the 5-year will be trade-able, resulting in continued disorder in the Russian financial system, which was described as already "in a state of collapse." ÿÿÿÿÿIn addition to Brazil, South Africa was mentioned as another key area that now is vulnerable. 11:32 EDT 08/26 c 1998 Market News Service, Inc. economeister.com