08/07/1998 16:55:39 Russia yields soar on foreign debt fall, auctions
By Anna Smirnova
MOSCOW, Aug 7 (Reuters) - Russian treasury bill yields
soared on Friday as a finance ministry announcement of new
government paper auctions next week exacerbated a price slide
caused by foreign debt prices, dealers said.
But trading volumes were low, and dealers said that Friday's
yields would not set the mood for Monday.
"The auction announcements were bad for the trend, because
when people are under stress and they only have about two and a
half hours to take decisions, the reaction is immediate and
emotional," a Western dealer said.
"Besides, chances are high that the auctions will be
cancelled and the finance ministry announced them to be on the
safe side -- in case things do not go too badly."
The central bank said on Friday the finance ministry would
auction six billion roubles of OFZ and GFO government bonds on
August 12. The ministry has already cancelled several previously
ING Bank dealer Alexander Romashov said the auctions could
push prices down since they encouraged banks to accumulate funds
and lighten sections of portfolios close to the new issues.
"Today's fall is not surprising at all -- there is no money,
people are as cautious and scared as before," he said.
"But given that the fall is on low volumes, it is clear that
the levels do not reflect the real state of the market."
Treasury bill yields soared to 85.31 percent from 64.90
percent on Thursday, but Romashov said the real market level was
around 80 percent.
Dealers said the market took the government forecasts that
foreigners would withdraw eight billion roubles from government
paper by the end of the year as good news.
"Judging by the statement, the finance ministry is realistic
in estimating what is going on and is ready for what lies ahead
for them in autumn," Romashov said.
Russian foreign debt fell to new historical lows on
crumbling emerging market confidence, and dealers said the fall
helped to drag domestic debt down.
The interbank rouble-dollar market was virtually unchanged,
with most banks executing only client orders.
Aug 7 Aug 6
Average yield (% annual)
T-bills 85.31 64.90
Floating-rate OFZ bonds 101.13 84.08
Fixed-rate OFZ bonds 91.47 80.77
Turnover (bln rbls) 2.09 3.34
Funds in system (bln rbls) 1.18 1.90
C.bank sales (mln rbl,mkt val) none 640.50
C.bank buying (mln rbl,mkt val) none none
Aug 7 Aug 7 Aug 6
rouble/dollar midday morning close
today delivery 6.2830-6.2840 6.2850-6.2860 6.2830-6.2840
tomorrow delivery 6.2880-6.2890 6.2870-6.2885 6.2855-6.2865
overnight credits (%) 20-25 25-30 40-50
central bank 6.2290/6.2880 6.2240/6.2860
official rate 6.2585 6.2550
MICEX fix 6.2850 6.2840
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