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Russia: Government Sells $2.5 Billion In Eurobonds To Restructure Debt

Moscow, 19 June 1998 (RFE/RL) - Russia has sold $2.5 billion in dollar denominated Eurobonds to help raise cash to pay short-term obligations. Senior finance ministry official Oleg Buklemeshev said the bonds, which were sold yesterday and come due in 30 years, will give the government time to restructure its growing debt. He said the sale proves Russia can still raise funds abroad, even during difficult times.

Analysts say the Eurobonds will help restructure expensive short-term government debt and ease the pressure on the financial markets which have been faltering as a result of the economic crisis in Asia.

The sale was managed by the U.S. bank J.P. Morgan and by Deutsche Bank of Germany. The bonds pay investors yearly interest of 12.75 percent, more than seven percentage points above a comparable bond sold by the U.S. Treasury.

Meanwhile, Russian stocks dropped today on news the International Monetary Fund (IMF) would postpone until next week a decision on whether to allocate a loan tranche of $670 million. The main Russian stock index fell about four percent from yesterday's close.

Russian Finance Minister Mikhail Zadornov said today that he is confident that talks next week with an IMF mission in Moscow would resolve any sticking points about the loan tranche.

Also today Russian President Boris Yeltsin told officials in the northwest Russian city of Kostroma that the country is "hanging on" in spite of what he said is an international economic crisis.

Speaking to reporters, Yeltsin said Russia needs only moral support of Western leaders and bankers to restore confidence in the country's currency, the ruble. He said Russia doesn't need money from abroad and that the delays in workers receiving back salaries and pensions is only "a temporary thing."

Yeltsin also told reporters that he was not planning to run again for president in 2000, saying a third term would not be allowed under the constitution.