RUSSIA: THE NEXT CHAPTERRussia's central bank is preparing to set up a domestic corporate bond market to make it easier for companies to raise funds - as well as to consolidate the country's large but unruly promissory note market. The market for veksels, as promissory notes are known in Russia, is estimated to be as large as $90 billion, making it nearly twice the size of the government securities market. Daily turnover in veksels regularly exceeds $1 billion. The market has taken off since the decline in short-term treasury bill (GKO) yields, which have fallen at the six-month maturity from 75% to 17%. Promissory notes issued by Russian companies and banks yield from about 25% to 100% at maturities of between two and six months, reflecting the extra risk of pure corporate debt. Following the lead of Poland and the Czech Republic, the Russian central bank is launching in the autumn a pilot programme for a secured corporate debt market. Andrei Kozlov, deputy chairman of the Russian Central Bank (RCB), says the project is a response to the tremendous financing needs of Russian companies and the interest shown mainly by domestic investors in the market for veksels. |