| The Thursday before the election they yielded 215%. One week later they yielded 130%. In July they breached 80%, before jumping to 94% one week later. At the time of writing, the central bank had allowed them to come down to an average in the low 80s. Welcome to the Russian government's domestic debt market, nicknamed the gekko market after its abbrevation GKO. Not surprisingly, foreign investors have been desperate to get a piece of this volatile, high-yield action. But so far the Russian government has not been so keen to oblige, fearing only the hottest of money will arrive. Until president Boris Yetsin's re-election the government's one concession was to offer a derivative product through Paris-based Eurobank. This guaranteed dollar returns of 19%, which the government optimistically expected would bring in foreign money to ease the cost of financing the government debt, the size of which has grown from $13 billion at the beginning of the year to $36 billion in July. Understandably, risk-hungry investors saw this as a little tame compared with the real thing. The government's latest concession, post-election, will hardly whet their enthusiasm either. |