International instruments
After the Soviet Union collapsed in late 1991, initially investors could only purchase three types of Russion debt. All were issued by Vnesheconombank, the former Soviet foreign trade bank:
- trade debt - serviced agreements between the former Soviet foreign trade bank and exporters. Each loan trades separately, with little liquidity.
'Vnesh' loans - defaulted obligations to commercial creditors, which trade as generic instruments. The majority of liquid are denominated in US dallars, German marks, Swiss francs, and Japanese yen.
- Eurobonds - international bonds issued in the late 1980s and punctually serviced. Three issues totalling some US$0.8 billion, matured in 1995.
In October 1993, the Russian Ministry of Finance issued five maturity series of three per cent coupon, dollar denominated bonds, to compensate enterprises
for hard currency deposits seized by Vnesheconombank. It has placed some $7.9 billion of these bonds, known as 'MinFins', and serviced them punctually. Transfer to and by foreigners is unrestricted, provided the bonds physically remain in Russia.
Rouble instruments
In 1993 the Ministry of Finance began issuing Treasury bills, or GKOs, denominated in roubles. In mid-1995, the Ministry began issuing floating rate
rouble bonds, called OFZs, with maturities exceeding one year.
Other rouble instruments trade in relatively small sizes. The most significant of these are:
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- Ministry of Finance promissory notes lKOs), intended to alleviate cash shortages without breaking central bank pledges to the MF. About $1.8 billion was issued from September 1994 to early 1995. KOs were redeemable in 365 days, or earlier if they circulated enough times. Less than $0.5 billion remains outstanding, with volumes shrinking rapidly.
- Municipal bonds - some $0.5 billion outstanding, with one dominant issuer St Petersburg sold its first municipal bond in March 1995 and has since held some 40 additional auctions, with maturities of six month constituting some 85 per cent of outstanding paper. Perm is the only other municipality that has issued general purpose bonds, with about $20 million outstonding. Other cities have marketed small, project specific issues.
- Commercial paper - issued mainly by top Russian banks and marketed only in the last few months.
Foreigners do not have unrestricted access to
rouble debt.
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