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A corporate bond market is slowly developing in Russia, but for the time being it appeals only to Russian banks and foreign investors with defaulted Russian treasury bill money trapped in special restricted accounts at the Central Bank of Russia.
Since June three Russian blue-chip companies have issued so-called rouble bonds to raise the finance needed for their investment programmes. Denominated in roubles, but index-linked to the rouble/dollar exchange rate, between them Gazprom, LUKoil and Tyumen Oil (TNK) have issued a total of Rb8.5 billion ($350 million) in bonds with maturities of between four and five years and yields of between 6% and 12.3%.
Since the government defaulted on its T-bills (known as GKOs) last summer, foreign investors have been avoiding Russia, making it all but impossible for the country's biggest companies to raise any form of financing. "[Rouble bonds ] are one of a few ways that Russian companies can raise relatively cheap finance at the moment," says Oleg Larichev, a fixed income fund manager at Troika Dialog, Russia's largest brokerage.