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Russia: Trading In Tsarist Bonds Suspended In Paris

Paris, 25 November 1996 (RFE/RL) -- Tsarist bonds, the name given to Russian bonds issued before 1914, were suspended from trading on the French Stock Exchange today.

The exchange announced the suspension amid speculation that the French and Russian governments have reached an agreement on paying them back. Russian Prime Minister Viktor Chernomyrdin is due to arrive in France tonight.

The French Finance Minstry said Finance Minister Jean Arthuis and Foreign Minister Herve de Charette met earlier today with representatives of holders of the bonds, reported the Bloomberg News Service.

The French Association of Tsarist bond holders, the Association Francaise des Porteurs d'Emprunts Russes (AFPER), declined to comment. But it said it may issue a statement soon.

French holders of the Tsarist bonds have opposed the credit rating given Russia for last week's sale of $1 billion worth of Eurobonds, Russia's first international money bond offering since before the Revolution.

The holders argue that the country still has not made good on previous promises to redeem its bonds. Debt bonds issued by Imperial Russia were repudiated by the Bolsheviks when they took power in 1917, According to AFPER, Russia promised to redeem the imperial bonds in February 1992 as part of a Franco-Russian treaty.

In an attempt to derail last week's Eurobond issue, the Tsarist bond holders placed an advertisement in London's influential "Financial Times" newspaper, urging a boycott of the Eurobonds.

However the Eurobond issue sold so well on international markets that American analysts called the response "phenomenal."

The full $1 billion worth of bonds were quickly sold and, one New York financial source said, Russia could well have doubled the size of the issue. Denominated in dollars, the bonds mature in five years and carry an interest rate which is about 3.5 percent above the rate paid by five-year U.S. treasury notes.

The storm to snap-up the bonds despite the pleas of the Tsarist bond holders shows that considerations of present profit outweigh concerns over historical wrongs.