13 Nov 2009 14:25

Investors want to exchange old Russian Eurobonds for new ones; Minfin not ready

MOSCOW. Nov 13 (Interfax) - Some investors would like to exchange older issues of Russian Eurobonds for new ones, a source in financial circles told Interfax.

The issue was discussed during the Finance Ministry's meeting with investors in London on November 5.

The meeting was part of preparations for a new issue of Eurobonds totaling up to $18 billion and planned for placement in 2010.

"The road show raised the issue of the possible exchange of old Eurobonds for new ones. Deputy Finance Minister Dmitry Pankin confirmed that investors had made the proposal, but that the Finance Ministry had made no decision," the source said.

Sources at investment banks and Eurobond market analysts said the old Eurobonds refers to the Russia-28 and Russia-30 issues. They have limited appeal because the former has low liquidity and the latter has an amortization redemption structure.

Konstantin Vyshkovsky, the head of the Finance Ministry's international financial relations, state debt and state financial assets department, confirmed to Interfax that the issue had been raised at the London meeting and said the exchange had been proposed by investors, not Russia.

"We did not raise that issue. But that was not just in London. Periodically someone advances some kind of idea," he said.

"But we are not examining the possibility. We have somewhat different goals now: raising financing [and not conducting an exchange]," Vyshkovsky said.

Russia currently has four sovereign Eurobond issues in circulation, maturing in 2010, 2018, 2028 and 2030.

The Russia-10 and Russia-30 Eurobonds were issued in 2000 to replace PRIN and IAN bonds issued by Vnesheconombank (VEB) used in an exchange for Soviet Debt owed to the London Club of creditors. The Russia-18 and Russia-28 bonds were placed in 1998 to raise financing, although some of the Russia-18 were exchanged for GKOs (T-bills).

As of October 1 the debt on those issues totaling $26.2 billion, including $328.2 million for Russia-10, $19.9 billion for Russia-30, $3.5 billion for Russia-18 and $2.5 billion for Russia-28.