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To: Sergio R. Mejia who wrote (16908)	8/29/1998 1:36:00 PM
From: goldsnow	Respond to of 116816

Russia Default Scatters Corporate Bond Market: Rates of Return By Lisa Kassenaar and Kathleen Spillane New York: Some of the top U.S. securities firms, stung by losses in Russian debt and concerned that even the ''A''-rated bonds of U.S. companies will depreciate, are increasingly skittish in their traditional role as market makers for corporate bonds, investors say. Wall Street's big traders are ''hiding under the desk right now,'' reducing their purchases of bonds from money managers, said Michael Gardner, who helps manage $30 billion of fixed-income securities at State Street Research & Management in Boston. While government bond markets in Europe and the U.S. are having one of their best years of the 1990s, U.S. corporate bonds are suddenly perilous to hold. Russia's default on its ruble-denominated debt this week prompted traders to discount the bonds of some developing nations by about 70 percent -- leaving investors with millions of dollars in losses and paring the value of the safest bonds investment banks hold in inventory. Securities firms ''lost a lot of money,'' and don't want to buy new bonds ''they know they can't liquidate or sell off immediately,'' said Michael Sanchez, who helps manage $1.5 billion of bonds at Hotchkiss & Wiley in Los Angeles. Bids investors do get are often unrealistically low, money managers said. bloomberg.com