Mandatory substitution of Eurobonds for local bonds will allow for restoration of Russian investors' rights - Chebeskov
MOSCOW. Feb 8 (Interfax) - The mandatory substitution of Eurobonds with local bonds will restore the rights of Russian investors, who will be able to obtain a full-fledged financial instrument, director of the Russian Finance Ministry's Financial Policy Department Ivan Chebeskov said.
"We support this proposal [to oblige issuers to issue substitute bonds], we believe this must be made mandatory," Chebekskov told reporters.
The head of the Ministry of Finance reminded that the presidential decree published in July made debt service to Russian investors a priority - the issuer must first settle with Russian holders of Eurobonds through the division of the coupon payment or through the issue of "substitute" bonds instead of Eurobonds.
The department head recalled that the presidential decree published in July made debt servicing to Russian investors a priority - the issuer must first pay the Russian holders of Eurobonds through the division of the coupon payment or through the issue of substitute bonds to replace Eurobonds.
"Until we made a decision in the [Ministry] sub-commission first, and the presidential decree fixed this issue, issuers were making payments to Euroclear; the payments were "frozen" there, and no one bothered about the investors. It's the same here. The issuers will also probably oppose the principle of mandatory substitution, because they have a certain practice of dividing the coupon and so on. But we understand that the bond is of limited value for the investor. That is, its liquidity is limited, he can't sell it, he receives payments on it, but it is not a full-fledged financial instrument," Chebeskov said.
"If you issue a substitute bond in the Russian infrastructure, it will be a full-fledged financial instrument. If you want, you sell it, if you want, you pledge it. In this vein, until now, the rights of Russian investors in such securities, they are infringed. And substitute bonds will allow these rights to be restored. This is the logic," he said.