Talks on the restructuring of GKOs - Russian treasury bills on which the government defaulted last August - have once more been cast into disarray just days before a deadline imposed by the Russian finance ministry was due to expire.
In a whirl of publicity Credit Suisse First Boston, co-chair alongside Deutsche Bank of the original group of 19 western creditor banks, has announced a new fund open to all holders of GKOs which claims to provide up to three times the estimated market value of the official Russian proposal. The only hitch is that news of the fund came as a surpise to the Russian ministry of finance.
CSFB's proposal is the Nikitsky Recovery Fund, born of the bank's dissatisfaction with the official debt talks. The settlement terms of the original proposal remain unclear to many but Deutsche Bank controversially came to an agreement just two days after issuing a statement saying it would press for an extension of the deadline. "CSFB believes that investors must be offered a real alternative to the restructuring terms presently proposed by the Russians," says a CSFB press release.
The Nikitsky fund, aptly named after a famous cathedral destroyed during the Stalinist era and recently rebuilt, will look for debt-equity swap opportunities to obtain better value on the defaulted GKOs.