New Russian debt policy announced at URALSIB Capital Conference: Russian Bond Market: A New Era in 2010

The second international conference Russian Bond Market: A New Era in 2010, organized by URALSIB Capital, hosted representatives of the Russian Ministry of Finance, the Federal Service for Financial Markets (FSFM), MICEX, the Central Bank of Russia, as well as leading experts on the debt market from international and Russian investment banks, law firms, management from the leading Russian issuers, foreign and Russian investors, and representatives of regions and municipalities within the Russian Federation.

Topics for discussion during the conference were rendered by the acutest challenges of the post-crisis bond market:

• Analysis of results of anti-crisis measures aimed at the bond market recovery,
• Exchange of opinions on the current situation on the bond market, and on urgent matters and issues,
• Discussion of the future structure of the bond market and the need for better regulation
• Discussion on challenges and prospects of sub-federal and municipal debt markets development.

Welcoming the conference participants was Boris Ginzburg, head of the Fixed Income Department. The executive director of URALSIB Capital indicated that events throughout the year testify to the renaissance taking place within the Russian debt market, and to a new quality stage of its development supported by relative economic stability, higher oil prices and a stable ruble. According to Ginzburg, forming of properly functioning internal debt market is to become the priority for the Russian financial authorities, as well as for the Russian financial community on the whole, as it is the source of market funding and an indicator of the economy’s organic growth.

During the plenary meeting, the Deputy Minister of Finance of the Russian Federation, Sergey Storchak, discussed changes to the state’s debt policy, to which the Ministry has turned after a two-year break. According to Mr. Storchak, in 2008 and 2009, the Ministry of Finance deliberately refused to issue the document as it was too difficult to forecast market development and consequences of borrowings under crisis. In his comments on the Ministry of Finance’s debt policy for 2011-2013, Storchak said that the Ministry is orientating itself rather toward borrowings on the internal market. The debt obligation program is to a promote reduction of the budget deficit. In total Russia’s borrowings on internal and external markets may amount to 1.5 trillion rubles in 2011, in 2012 1.3 trillion rubles, and in 2013 931 billion rubles. At the same time, he indicated that the Ministry of Finance will maintain a flexible borrowing policy and, possibly, reconsider the relevance of borrowings on the external market depending on the environment and needs.

During the discussion of corporate placements, Pavel Filimoshin, the head of securities management office of the FSFR, noted the increasing popularity of commercial papers. And Pavel Filimoshin said that FSFR may raise the issue of extending the maximum maturity of commercial papers from 3 to 5 years, and possibly up to 10 years. He also discussed a number of initiatives developed by the FSFR – legislative draft on traded shares, which may be filed with the State Duma in the second half of 2010, and a draft on general meetings of bond holders, which is already being considered by deputies.

In addition to matters on the general condition of the market, during the conference the participants discussed challenges and prospects of development of sub-federal and municipal debt markets. Among the participants were Sergey Glazkov, the counselor of the Chairman of the State Borrowing Committee of the city of Moscow, and Vladimir Redkin, the director for international regional finance of Fitch Ratings, as well as representatives of different Russian regions. Special practical interest was raised by the meeting, during which representatives of financial institutions of Kazan and Tomsk region presented business cases with a description of their regions’ budget strategy.

On the whole, over 200 delegates participated in the conference, including representatives Russian and foreign institutional investors, leading Russian issuers, Government structures and the leading mass media. During the conference, over 100 meetings with participation from 16 Russian issuers and 30 institutional investors were held.

Link to the conference web site: http://bondcongress.uralsibcap.ru/en/

28 June, 2010