innocent
07-10-2008, 09:59 PM
Russia Providing $200 Billion for Banks, Builders (Update1)
By William Mauldin
Oct. 7 (Bloomberg) -- Russian President Dmitry Medvedev is tackling the country's worst financial crisis since the 1998 default by providing almost $200 billion for banks, builders and energy producers.
Medvedev announced $36 billion of loans for banks today on top of a $150 billion support package pledged in September for companies and lenders, while Moscow's city government said it will spend as much as $2 billion bailing out developers. Russia may also lend $5.4 billion to Iceland, Finance Minister Alexei Kudrin said today.
Russia is using the world's third-biggest foreign-currency reserves at $563 billion to persuade investors that a decade- long oil boom has left it equipped to weather the credit crisis. The benchmark Micex Index, which fell a record 19 percent yesterday, continued sliding today.
``The problem is that the average investor didn't expect government to have to step in quite so aggressively as they have had to,'' said Gary Dugan, chief investment officer for Europe at Merrill Lynch Global Wealth Management in London, which oversees $2 trillion. ``The shock that governments have had to get involved to the extent they have is leading to the continued selloff in the markets.''
Russia's RTS Index dropped 63 percent this year, the fifth- worst among 88 national equity benchmarks tracked by Bloomberg, as falling oil prices exacerbated a rout that began with the five-day war in Georgia in August.
Bank Loans
Regulators have suspended stock trading nine times in the past three weeks, including this morning.
``When markets come down like this we add, not subtract,'' Mark Mobius, who manages about $30 billion in emerging market stocks as executive chairman of Templeton Asset Management Ltd., said in an interview from Milan today. ``It's a once-in-a- lifetime opportunity.''
OAO Sberbank, Russia's biggest lender, should get more than half of the planned loans announced today at 500 billion rubles ($19 billion), and No. 2 bank VTB Group may borrow 200 billion rubles, Medvedev said. Sberbank rose 2 percent and VTB climbed 5.2 percent. The Micex Index fell 1 percent to 744.76.
``Medvedev's proposal is only positive if the banks pass it on through the system,'' said James Beadle, an investment strategist at Pilgrim Asset Management in Moscow.
The MosPrime interbank rate, a measure of the short-term interest that the biggest Russian banks charge each other, soared to 7.29 percent today from 4.75 percent at the end of last week.
Icelandic Request
Helping Iceland may lift investor confidence by advancing ``the prestige of Russia,'' said Beat Siegenthaler, chief emerging markets strategist in London at TD Securities Ltd.
``Russia wants to show that it's a financial power and is willing to help solve the global crisis,'' said Siegenthaler. ``They have the reserves.''
OAO Lukoil, Russia's second-biggest oil producer, said it will seek to borrow between $2 billion and $5 billion from the government to refinance loans, spokesman Dmitry Dolgov said by phone today. OAO Gazprom, Russia's largest company, OAO Rosneft, its biggest oil producer, and TNK-BP, BP Plc's joint venture in Russia, are also borrowing from the government, Lukoil said.
The loans may be used for ``force majeure situations'' or long-term investments in energy projects, Gazprom said today in a statement distributed by the Regulatory News Service. The Moscow-based company said it doesn't need to increase its current borrowing program.
Marina Dracheva, spokeswoman for TNK-BP, and Nikolai Manvelov, a Rosneft spokesman, declined to comment immediately.
Construction
The city of Moscow is in talks to buy land and apartments from construction companies in need of cash, Deputy Mayor Yuri Roslyak said, according to his spokesman, Leonid Bratkin. The transactions will probably take place by the end of the year, Bratkin said by phone today.
The Federal Reserve in the U.S. said today it will create a special fund to purchase commercial paper after the credit crunch threatened to cut off a key source of funding for corporations. The funds won't come from the $700 billion rescue plan authorized by Congress last week.
``When you compare the size of the economies, it's more funds than the U.S. is providing,'' said Thomas Fasbender, director at ParusKreml Capital Management in Moscow.
The cost of protecting Russian government bonds from default increased 20 basis points to 304 basis points, according to CMA Datavision's prices for credit-default swaps. The contracts cost as little as 36 basis points in May last year.
Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. An increase indicates a deterioration in the perception of credit quality.
A basis point on a credit-default swap contract protecting 10 million euros ($13.6 million) of debt from default for five years is equivalent to 1,000 euros a year.
المصدر (http://www.bloomberg.com/apps/news?pid=20601087&sid=a16BnNfBwIkw&refer=home)
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By William Mauldin
Oct. 7 (Bloomberg) -- Russian President Dmitry Medvedev is tackling the country's worst financial crisis since the 1998 default by providing almost $200 billion for banks, builders and energy producers.
Medvedev announced $36 billion of loans for banks today on top of a $150 billion support package pledged in September for companies and lenders, while Moscow's city government said it will spend as much as $2 billion bailing out developers. Russia may also lend $5.4 billion to Iceland, Finance Minister Alexei Kudrin said today.
Russia is using the world's third-biggest foreign-currency reserves at $563 billion to persuade investors that a decade- long oil boom has left it equipped to weather the credit crisis. The benchmark Micex Index, which fell a record 19 percent yesterday, continued sliding today.
``The problem is that the average investor didn't expect government to have to step in quite so aggressively as they have had to,'' said Gary Dugan, chief investment officer for Europe at Merrill Lynch Global Wealth Management in London, which oversees $2 trillion. ``The shock that governments have had to get involved to the extent they have is leading to the continued selloff in the markets.''
Russia's RTS Index dropped 63 percent this year, the fifth- worst among 88 national equity benchmarks tracked by Bloomberg, as falling oil prices exacerbated a rout that began with the five-day war in Georgia in August.
Bank Loans
Regulators have suspended stock trading nine times in the past three weeks, including this morning.
``When markets come down like this we add, not subtract,'' Mark Mobius, who manages about $30 billion in emerging market stocks as executive chairman of Templeton Asset Management Ltd., said in an interview from Milan today. ``It's a once-in-a- lifetime opportunity.''
OAO Sberbank, Russia's biggest lender, should get more than half of the planned loans announced today at 500 billion rubles ($19 billion), and No. 2 bank VTB Group may borrow 200 billion rubles, Medvedev said. Sberbank rose 2 percent and VTB climbed 5.2 percent. The Micex Index fell 1 percent to 744.76.
``Medvedev's proposal is only positive if the banks pass it on through the system,'' said James Beadle, an investment strategist at Pilgrim Asset Management in Moscow.
The MosPrime interbank rate, a measure of the short-term interest that the biggest Russian banks charge each other, soared to 7.29 percent today from 4.75 percent at the end of last week.
Icelandic Request
Helping Iceland may lift investor confidence by advancing ``the prestige of Russia,'' said Beat Siegenthaler, chief emerging markets strategist in London at TD Securities Ltd.
``Russia wants to show that it's a financial power and is willing to help solve the global crisis,'' said Siegenthaler. ``They have the reserves.''
OAO Lukoil, Russia's second-biggest oil producer, said it will seek to borrow between $2 billion and $5 billion from the government to refinance loans, spokesman Dmitry Dolgov said by phone today. OAO Gazprom, Russia's largest company, OAO Rosneft, its biggest oil producer, and TNK-BP, BP Plc's joint venture in Russia, are also borrowing from the government, Lukoil said.
The loans may be used for ``force majeure situations'' or long-term investments in energy projects, Gazprom said today in a statement distributed by the Regulatory News Service. The Moscow-based company said it doesn't need to increase its current borrowing program.
Marina Dracheva, spokeswoman for TNK-BP, and Nikolai Manvelov, a Rosneft spokesman, declined to comment immediately.
Construction
The city of Moscow is in talks to buy land and apartments from construction companies in need of cash, Deputy Mayor Yuri Roslyak said, according to his spokesman, Leonid Bratkin. The transactions will probably take place by the end of the year, Bratkin said by phone today.
The Federal Reserve in the U.S. said today it will create a special fund to purchase commercial paper after the credit crunch threatened to cut off a key source of funding for corporations. The funds won't come from the $700 billion rescue plan authorized by Congress last week.
``When you compare the size of the economies, it's more funds than the U.S. is providing,'' said Thomas Fasbender, director at ParusKreml Capital Management in Moscow.
The cost of protecting Russian government bonds from default increased 20 basis points to 304 basis points, according to CMA Datavision's prices for credit-default swaps. The contracts cost as little as 36 basis points in May last year.
Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. An increase indicates a deterioration in the perception of credit quality.
A basis point on a credit-default swap contract protecting 10 million euros ($13.6 million) of debt from default for five years is equivalent to 1,000 euros a year.
المصدر (http://www.bloomberg.com/apps/news?pid=20601087&sid=a16BnNfBwIkw&refer=home)
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