A SUPPLEMENT TO EUROMONEY - APRIL 1997Russia's domestic capital markets are developing at an impressive pace. Companies wishing to raise equity or debt capital will continue to look to the international markets of course, but it may not be long before Russian entities can raise some finance in the domestic markets through bond issues. The Russian government's own fund-raising activities account for this progress. The Russian treasury bill market (the GKO market) has grown from its start in 1993 to reach outstandings of over $40 billion today. A lack of domestic institutional investors means that foreigners dominate buying in the equity markets, but GKOs are a different story. The GKO market, from which foreigners were until recently excluded, has been able to attract substantial funds from Russian buyers. By far the biggest players have been Russian banks. Yields in the GKO market were extremely high, reaching a peak of 327% in January 1995. This made GKOs a far more attractive investment than the lending banks had intended. For borrowers, the high interest rates made it prohibitively expensive. But in recent months yields in the GKO market have fallen sharply. |