Demand for Eurobonds issued by Russian companies is quite likely to remain high in 2005, while spread between the yield on Russian corporate Eurobonds and U.S. Treasury bonds will narrow another 40-70 basis points, Interfax Center for Economic Analysis analysts predict.
Substantially positive factors for the bond market are Lehman Brothers putting Russian bonds on their list and Standard & Poor's boosting Russia's rating to an investment-level 'BBB-', which increase Russia's borrowing power abroad, the CEA analysts say. The country agreeing terms for paying off its Paris Club debts ahead of schedule is another.
Russia plans to pay some $10 billion worth of foreign debt in 2005, $6 billion of that to Germany, the country's biggest creditor in the Club. Political risks will continue to cause danger for the market, particularly the possibility of new tax claims against major companies. Also, the cost of many corporate forex bonds will to a significant degree depend on the state of world commodities markets, notably oil and metals, so a drop in raw materials prices could upset the apple cart. That said, the current oil, gas and metal price forecasts are bright for producer-companies.
Source: Interfax
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