14 Sep 2009 15:45

Russia must be ready by the beginning of 2010 to borrow abroad

MOSCOW. Sept 14 (Interfax) - Russia must be ready to borrow abroad by the beginning of 2010 under the plan for foreign borrowing, the head of the ministry's department for international financial relations, state debt and state financial assets Konstantin Vyshkovsky told journalists on Monday.

"For now we are basing our plans on a market foray in 2010. We must be ready by the beginning of the year," he said, adding that the specific date has not been determined.

"First the ability to do so must be established, and then the appropriate moment determined," Vyshkovsky said.

The Finance Ministry would like to complete the exchange of Soviet debt for Eurobonds before starting to borrow abroad. Commercial creditor claims are currently being verified and the exchange of verified claims will be completed before year-end.

The operation is one element in the return to external markets, he said, adding that commercial creditors are part of the target market for a placement of Eurobonds.

"We view the presence of commercial debt in Russia's portfolio as a negative factor," Vyshkovsky said. The exact date of the exchange will most likely be named by the end of October. Potential claims total about $700 million. At least part of that will not have to be paid, since some claims were not filed and others could not pass verification. Vyshkovsky said claims totaling "several hundred million dollars" would be paid.

Work has already begun on the tender to select the legal consultant for the Eurobond placement. The results of the tender will be announced on September 28. Work is also underway to select the bank agent for the placement. "It will be leading investment banks, the industry leaders," adding that the Finance Ministry believes there should be several. He did not rule out the possibility a Russian bank would participate.

The focus should not be on the total amount of borrowing contained in the 2010-2012 federal budget - about $18 billion in 2010 alone. "it is entirely possible that those volumes will not be needed. Everything will depend on the market," he said.

Vyshkovsky said a road show would be conducted in one form or another. There are several options: a full-fledged road show with a visit to all the leading financial centers or an abbreviated version. In any event, he said, a presentation for investors on the current situation in Russia should be held before going to the market to borrow. Vyshkovsky did not name the dates for the road show, saying that would be clear within the month.