RUSSIAN FIXED INCOME MONTHLY Cbonds

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RUSSIAN FIXED INCOME MONTHLY
                11, 2004
        published Nov, 5th 2004




            Cbonds news agency,
            Russia, St. Petersburg
          Prepared by Igor Sazonov
           E-mail: is@cbonds.info
Russian fixed income monthly                                                                                                                                   11, 2004




TABLE OF CONTENTS




Russian Bond Congress 2004: General Info ......................................................................................3
Monthly Tables ...................................................................................................................................................4
Top News ..............................................................................................................................................................12
PC Debt Securitizing – Will German Wait For Consensus With Russia?...................................................................12
USD100 Bln Reserves Level Left Behind. Is Second Investment Grade On The Way?.............................................13
External Debt Market ....................................................................................................................................15
Upsized Issues .............................................................................................................................................................15
Initial placements ........................................................................................................................................................16
Market performance ....................................................................................................................................................19
Issues to come .............................................................................................................................................................20
The second attempt of Alrosa......................................................................................................................................20
Following Gazprom. Rusal To Launch Credit Notes On Security Of Its Export Revenue .........................................20
Domestic Debt Market ..................................................................................................................................24
GKO-OFZ market .......................................................................................................................................................24
Beaver Bonds: Good For CB, Inert For The Market ...................................................................................................24
Municipal bond market................................................................................................................................................27
Corporate bond market ................................................................................................................................................29
Issues to come .............................................................................................................................................................33
Ratings ....................................................................................................................................................................37
Essential ratings actions on Russia’s issuers: Oct 2004 ..............................................................................................37
Municipals ...................................................................................................................................................................40
Corporates ...................................................................................................................................................................42




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                                                                                        2                                               prepared by Igor Sazonov
                                                                                                                                                  is@cbonds.info
Russian fixed income monthly                            11, 2004


Russian Bond Congress 2004: General Info




                                3          prepared by Igor Sazonov
                                                     is@cbonds.info
Russian fixed income monthly                                                              11, 2004

Monthly Tables
Table #1
Russia's eurobond market sectors amounts (at par, USD* mln)
                                                      29.10.2004     30.09.2004   31.08.2004
     General Russia's sovereign eurobonds amount            66411         65165        62920
                                 Soverein eurobonds        43242          43211        43192
                                Corporate eurobonds        22179          21030        18827
                                Municipal eurobonds           990           924          901
                     EURO/USD cross exchange rate          0.7818        0.8118       0.8321
* other than USD denominated eurobonds are recalculated to USD

Table #2
Monthly eurobond placements and redemptions
                   Eurobond placements                          Eurobond redemptions
                              Amount at par Coupon,                         Amount at par
            Issuer                (mln)        %                 Issuer
      Alfa Bank (EMTN)           USD 15     8.000%            Moscow City,    USD 448
                                                               2004 EUR
      Vneshtorgbank               USD 450          7.500%
      Promsvyazbank               USD 100         10.250%
        Vimpelcom                 USD 300          8.375%
         Rosbank                  USD 225          9.750%



Total*                           USD 1 090                  Total*                USD 448
* in USD equivalent

Table #3




                                                 4                           prepared by Igor Sazonov
                                                                                       is@cbonds.info
Russian fixed income monthly                                                                              11, 2004

Table #4
Expected eurobond issues
                                   Expected
 7               Issuer            placement     Currency              Expected amount                   Lead(s)
                                      date
 1              Megafon              2004         USD                  at least 200 mln              ING, Citigroup
 2              Alrosa               2004         USD                       800 mln                  ING, JPMorgan
 3              Aeroflot             2004         USD                       100 mln
 4            Ak Bars Bank           2004         USD                    100-150 mln
 5             Zenit Bank            2004         USD                    125-175 mln
                                                                USD2.5 bln programme (USD1.165
 6            VTB (ETMN)             2004          USD                     bln placed)
           Gazprom (ETMN) (by                     USD,           4bln. (EURO1 bln already been     Deutsche Bank, UBS
 7              tranches)            2004         EURO                      placed)
 8             East Line             2004         EURO                      220 mln                  Dresdner Bank
 9    Moscow International Bank      2004          USD                   100-150 mln
 10          Mezhprombank            2004          USD                      200 mln
 11           Menatep SPb            2004          USD                   100-150 mln
 12         Novosibirskenergo        2004          USD                    50-100 mln
 13         Polymetal (CLN)          2004          USD                      70 mln                    NOMOS Bank
 14          Rosevrobank             2004          USD                      30 mln
 15            Tatarstan             2004         EURO                   100-300 mln
 16              TNK                 2004          USD                    up to 1 bln
 17   Pipe metallurgical company     2004          USD                   circa 50 mln
 18         Razgulyaj-Ukrros       early2005       USD                   100-200 mln
                                                                  programme worth USD400 mln
                                                                                                    UBS, Merrill Lynch
                                                                (USD190 mln already been placed)
 19        Alfa Bank (EMTN)        early 2005     USD

                                    summer-
 20         Russian Railways         fall 2005    USD                     up to 1 bln
 21              Lukoil                2005       USD                      500 mln
 22            OMZ (CLN)               2005       USD                      100 mln
 23              RusAl               1H 2005      USD                    200-300 mln
 24            Mosenergo            late 2005
 25           UTAir Airlines       2005-2006
 26        Hanty-Mansi Region
 27               Irkut            early2006      USD                      100 mln
 28           Perekrestok                         USD
 29           Evrazholding           2005         USD




                                                            5                               prepared by Igor Sazonov
                                                                                                      is@cbonds.info
Russian fixed income monthly                                                                                       11, 2004

Table #5

Russian eurobonds quotes
                Issuer          Maturity date    Price          Yield,       Yield,       Change
                                                               end Aug      end July
Aries, 14                           25.10.2014     116.875         7.18%         7.79%       -0.62%
ALROSA, 08                          06.05.2008      101.97         7.47%         8.20%       -0.73%
Alfa-Bank, 05                       19.11.2005      104.36         6.40%         7.35%       -0.95%
AFK Sistema, 08                     14.04.2008      107.61         7.69%         8.86%       -1.17%
AFK Sistema, 11                     28.01.2011      102.44         7.65%         8.97%       -1.32%
Zenit Bank, 06                      12.06.2006      100.25         9.07%         9.42%       -0.35%
Bank of Moscow, 09                  28.09.2009       100.5         7.86%
Petrocommerce Bank, 07              09.02.2007      100.27         8.84%         9.42%       -0.58%
Russain Standard bank, 07 LPN       02.04.2007      102.56         7.57%         7.68%       -0.11%
Russain Standard bank, 07           28.09.2007      100.69         7.52%                      7.52%
WBD, 08                             21.05.2008       98.52         8.99%         9.61%       -0.62%
VTB, 08                             11.12.2008       103.5         5.83%         6.45%       -0.62%
VTB, 11                             12.10.2011      103.23         6.84%
Vimpelcom, 05                       26.04.2005      103.56         3.08%         3.59%       -0.51%
Vimpelcom, 09                       16.06.2009      109.12         7.61%         8.29%       -0.68%
Gazprom, 07                         25.04.2007      109.75         4.91%         5.28%       -0.37%
Gazprom, 09                         29.10.2009       118.5         6.12%         6.69%       -0.57%
Gazprom, 10E                        27.09.2010      107.99         6.14%         6.72%       -0.58%
Gazprom, 13                         01.03.2013       113.5         7.41%         7.77%       -0.36%
Gazprom, 34                         28.04.2034      111.68         7.61%         8.04%       -0.43%
Gazprombank, 05                     04.10.2005      106.27         2.81%         3.47%       -0.66%
Gazprombank, 08                     30.10.2008      102.98         6.38%         7.02%       -0.64%
Evrazholding, 06                    25.09.2006      102.81         5.63%         8.07%       -2.44%
Evrazholding, 09                    03.08.2009      105.63         9.36%        10.19%       -0.83%
Nikoil, LPN                         19.03.2007       99.71         9.13%        10.00%       -0.87%
MDM Bank, 05                        16.12.2005      103.37         7.56%         8.27%       -0.71%
MDM Bank, 06                        23.09.2006      101.06         8.74%         9.37%       -0.63%
MinFin, 05                          14.05.2008       92.82         5.26%         5.85%       -0.59%
MinFin, 06                          14.05.2006       98.84         3.77%         4.35%       -0.58%
MinFin, 07                          14.05.2011       83.06         6.22%         6.90%       -0.68%
MinFin, 08                          14.11.2007       96.12         4.63%         5.08%       -0.45%
CCD, 05                             18.02.2005      101.94         3.34%         3.71%       -0.37%
CCD, 08                             21.10.2008      101.76         0.0747        0.0804      -0.57%
City of Moscow, 06                  28.04.2006      110.19         3.77%         4.48%       -0.71%
Mobile Telesystems, 04              21.12.2004      101.29         1.90%         3.60%       -1.70%
Mobile Telesystems, 08              30.01.2008      108.73         6.70%         7.36%       -0.66%
Mobile Telesystems, 10              14.10.2010      102.75         7.78%         8.15%       -0.37%
Nizhnii Novgorod Region, 07         03.04.2005           101                                  0.00%
NOMOS, 07                           13.02.2007       100.5         8.85%         9.52%       -0.67%
NorNickel, 09                       30.09.2009       98.65         7.45%         7.49%       -0.04%
Rosneft, 06                         20.11.2006      115.73         4.64%         5.01%       -0.37%
Russia, 05                          24.07.2005      104.53         2.49%         3.22%       -0.73%
Russia, 05DEM                       31.03.2005      102.97         2.10%         2.88%       -0.78%
Russia, 07                          26.06.2007      114.65         4.12%         4.84%       -0.72%
Russia, 10                          31.03.2010      111.56         4.52%         5.39%       -0.87%
Russia, 18                          24.07.2018       136.6         6.84%         7.37%       -0.53%
Russia, 28                          24.06.2028      158.87         7.42%         7.83%       -0.41%
Russia, 30                          31.03.2030      100.06         6.80%         7.24%       -0.44%
Sberbank FRN, 06                    24.10.2006      100.64         3.32%         3.84%       -0.52%
Severstal, 09                       24.02.2009       99.56         8.73%         9.08%       -0.35%
Severstal, 14                       19.04.2014       96.75         9.62%
Sibneft, 07                         13.02.2007      110.51         6.47%         8.06%       -1.59%
Sibneft, 09                         01.01.2009      110.85         7.67%         8.91%       -1.24%
TNK, 07                             06.11.2007      114.22         5.80%         6.31%       -0.51%
Ural-Siberian Bank, 06              06.07.2006      100.24         8.71%         9.81%       -1.10%




                                                                  6                                   prepared by Igor Sazonov
                                                                                                                is@cbonds.info
Russian fixed income monthly                    11, 2004

Table #6




                               7   prepared by Igor Sazonov
                                             is@cbonds.info
Russian fixed income monthly                                                            11, 2004

Table #7
Russia's domestic financial markets volumes (RUR, mln)
                                                 29.10.2004 30.09.2004    31.08.2004

GKO-OFZ market volume (at par)                      492 010    474 460        455 050
Domestic corporate debt market volume (at par,
placed issues)                                      211 478    198 478        198 678
                        - non-financial companies   173 988    161 738        161 838
                  - banks and financial companies    37 490     36 740         36 840
Number of issues                                        185        181            182
Number of issuers                                       162        160            161
Municipal bond market volume                        121 384    108 160         96 438
Non-financial companies issues/ bank credits to
enterprises, % (estimation)                           6.4%       6.1%           6.3%
RUX Cbonds Index                                     166.27     162.39         159.71

Table #8

Russia's domestic debt markets turnovers (RUR, mln)
                                                 Oct 2004    Sept 2004     Aug 2004
GKO-OFZ (CBR data)                                  34 422.9   34 198.8      20 503.1
Municipal domestic bonds (exchange market,
Cbonds data)                                        59 227.9   41 106.4      21 429.2
Municipal domestic bonds (OTC market, NDC data)
                                                                5 058.0      14 953.8
Corporate domestic bonds (exchange market)
                                                    50 319.9   37 680.0      31 135.7
Corporate domestic bonds (OTC market, NDC data)
                                                               35 973.0      23 929.8
Corporate domestic bonds, total turnover
                                                               73 653.0      55 065.5
Domestic corporate bond market velocity (monthly
turnover / issues amount)                                        37.1%          27.7%




                                                8                         prepared by Igor Sazonov
                                                                                    is@cbonds.info
Russian fixed income monthly                                                                           11, 2004



Table #9

Domestic corporate bond placements and redemptions
                                        Bond Placements                                          Bond Redemptions
                                  Amount at par Amount placed      Demand on      Number of               Amount at
             Issuer                   (RUR)           (RUR)      auction (RUR)      Bids         Issuer   par (RUR)
            SMARTS                1 000 000 000   1 000 000 000   1 041 140 000      98
   Uralvagonzavod Finance         2 000 000 000   2 000 000 000   2 110 000 000      60
         UTK 3rd series           3 500 000 000   3 500 000 000   3 396 371 000     110
      Gazprom 5th series          5 000 000 000   5 000 000 000   9 000 000 000      73
           HCF Bank               1 500 000 000   1 500 000 000   1 800 000 000      39
            Evroset               1 000 000 000   1 000 000 000    722 020 000       57
   Baltika Brewing Company        1 000 000 000   1 000 000 000 private placement

Total                               15 000 000 000 15 000 000 000                   437       Total
* Only issues with outstanding volume more than RUR1bln (USD 30 mln) are included




                                                             9                            prepared by Igor Sazonov
                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                                                         11, 2004

Table #10
Expected corporate RUR bonds issues
             Issuer                                                                     Leads                            Current issue status
                                 Expected    Expected issue
7                             placement date amount (RUR)
 1     Roskhleboproduct           38294       1 000 000 000                             Rosbank                               Registered
 2     Uralsvyazinform 4s         38295       3 000 000 000                          ICB, Rosbank                             Registered
 3    Salavalnefteorgsintez       38307       3 000 000 000                    Zenit Bank, UralSib Bank                       Registered
 4     Transmashholding          Nov 2004     1 500 000 000                           Impexbank                               Registered
                                                                                       MDM Bank
                                     Nov 2004         3 000 000 000                                                           Registered
 5 Pipe Metallurgical Company
 6            Lukoil               Nov-Dec 2004       6 000 000 000    Renaissance Capital, IG Capital, Alpinex               Registered
 7    Incom Nedvizhimost           Nov-Dec 2004       1 500 000 000          Impexbank,Rosenergobank                          Registered
 8       Salut Energia             Nov-Dec 2004       3 000 000 000             Rosbank, VTB, ICB                             Registered
 9       SU-155 Capital            Nov-Dec 2004       2 500 000 000                 Alfa Bank                                 Registered
     Chelyabinsk Tube Rolling     late 2004 - early                               Raiffeisenbank
                                                      3 000 000 000                                                           Registered
10             Plant                    2005
11     Uralsvyazinform 5s          Feb-Mar 2005       2 000 000 000      Rosbank and Renaissance Capital                      Registered
12         Gazprom 4s                   2005          5 000 000 000      Rosbank and Renaissance Capital                      Registered
13         Gazprom 6s                   2005          5 000 000 000      Rosbank and Renaissance Capital                      Registered
14        Baltimor-Neva                               1 000 000 000                  NIKoil                                   Registered
15        Avangard Bank                               1 000 000 000              Avangard Bank                                Registered
16         Soyuz Bank                                 1 000 000 000               Soyuz Bank                                  Registered
17       Voulkan Finance                              1 000 000 000                MDM Bank                                   Registered
18       GT-TETS Energo                               1 500 000 000                   MIB                                     Registered
19      JFC International                             1 200 000 000                  Nikoil                                   Registered
20            NIKoil                                  2 000 000 000                  Nikoil                                   Registered
21          NOVATEK                                   1 000 000 000                                                           Registered
22     Mechel Steel Group                             2 000 000 000                   Alfa Bank                               Registered
                                                                          Alfa Bank, MDM Bank, Rosbank,
            Transneft                                 12 000 000 000   Reinassance Capital, IC Troika Dialog,                 Registered
23                                                                                    NIKoil
24        Toulachermet                                1 000 000 000               Bank of Moscow                              Registered
                                                                                       VTB
                                                                                                                              Registered
25         UTair Finance                              1 000 000 000
26             AIZhK                                  2 250 000 000         VTB, VEB, Reinassance Capital         The decision on the issue is approved
27          LSR Group                                 1 000 000 000                  ICB, Nikoil                  The decision on the issue is approved
28           Detskij Mir                              2 000 000 000                                               The decision on the issue is approved
29           Impexbank                                1 000 000 000                  Impexbank                    The decision on the issue is approved
30             ITERA                                  2 000 000 000            Rosbank, Bank of Moscow            The decision on the issue is approved
31         Kubanenergo                                1 200 000 000                                               The decision on the issue is approved
32          Megafon 3s                                3 000 000 000                                               The decision on the issue is approved
33          Megafon 3s                                2 300 000 000                                               The decision on the issue is approved
34          Megafon 3s                                1 500 000 000                                               The decision on the issue is approved
35     Mirax Lenstroimontazh                          1 000 000 000              Planeta Capital                  The decision on the issue is approved
36 Nizhnekamskneftekhim 4s                            1 500 000 000          MDM Bank, IC Troika Dialog           The decision on the issue is approved
37    Russian Railways 1s                             4 000 000 000       Web Invest Bank, JP Morgan Bank         The decision on the issue is approved
38    Russian Railways 2s                             4 000 000 000       Web Invest Bank, JP Morgan Bank         The decision on the issue is approved
39    Russian Railways 3s                             4 000 000 000       Web Invest Bank, JP Morgan Bank         The decision on the issue is approved
40       Rosselhosbank                                3 000 000 000                                               The decision on the issue is approved
41      RTK Leasing 4s                                2 250 000 000            Raiffeisenbank, TRUST              The decision on the issue is approved
42    North West Telecom                              3 000 000 000          Web Invest Bank, Svyazbank           The decision on the issue is approved
43 Finance International Invest                       1 000 000 000                                               The decision on the issue is approved
44          FSK UES                                   5 000 000 000                IC Troika Dialog               The decision on the issue is approved
45    Etalon LenspetsSMU                              1 000 000 000               Vozrozhdenie Bank               The decision on the issue is approved




                                                                          10                                      prepared by Igor Sazonov
                                                                                                                            is@cbonds.info
Russian fixed income monthly                                                                                                                                                                                                                                                                                                                                             11, 2004

Table #11

RUX-Cbonds Index
        Date               Index value   Index YTM (%)
                                                                                                                                                 RUX-Cbonds Index, Month Performance
                                                          168.00
                                                          167.00
                                                          166.00
                                                          165.00
            29.10.2004         166.27             8.19    164.00
                                                          163.00
              28.10.2004        166.12             8.24   162.00
                                                          161.00
              27.10.2004        166.39             8.08   160.00




                                                                               30.09.2004

                                                                                                     02.10.2004

                                                                                                                              04.10.2004

                                                                                                                                                        06.10.2004

                                                                                                                                                                             08.10.2004

                                                                                                                                                                                                   10.10.2004

                                                                                                                                                                                                                            12.10.2004

                                                                                                                                                                                                                                                  14.10.2004

                                                                                                                                                                                                                                                                        16.10.2004

                                                                                                                                                                                                                                                                                                 18.10.2004

                                                                                                                                                                                                                                                                                                                           20.10.2004

                                                                                                                                                                                                                                                                                                                                                22.10.2004

                                                                                                                                                                                                                                                                                                                                                                      24.10.2004

                                                                                                                                                                                                                                                                                                                                                                                                26.10.2004

                                                                                                                                                                                                                                                                                                                                                                                                                     28.10.2004
              26.10.2004        166.26             8.13
              25.10.2004        166.40             8.03
              22.10.2004        166.09             8.12
                                                                                                                                                   RUX-Cbonds Index YTM Month Performance
              21.10.2004        165.55             8.38
                                                           9.90
              20.10.2004        165.45             8.41    9.50
                                                           9.10
              19.10.2004        165.23             8.50    8.70
                                                           8.30
              18.10.2004        165.14             8.52    7.90
                                                           7.50
              15.10.2004        164.95             8.54




                                                                       30.09.2004

                                                                                                02.10.2004

                                                                                                                          04.10.2004

                                                                                                                                                   06.10.2004

                                                                                                                                                                         08.10.2004

                                                                                                                                                                                                10.10.2004

                                                                                                                                                                                                                          12.10.2004

                                                                                                                                                                                                                                                14.10.2004

                                                                                                                                                                                                                                                                      16.10.2004

                                                                                                                                                                                                                                                                                                18.10.2004

                                                                                                                                                                                                                                                                                                                       20.10.2004

                                                                                                                                                                                                                                                                                                                                               22.10.2004

                                                                                                                                                                                                                                                                                                                                                                      24.10.2004

                                                                                                                                                                                                                                                                                                                                                                                                26.10.2004

                                                                                                                                                                                                                                                                                                                                                                                                                      28.10.2004
              14.10.2004        164.73             8.63
              13.10.2004        164.46             8.74
              12.10.2004        164.53             8.68
                                                                                                                                RUX-Cbonds Index, Year Period Performance
              11.10.2004        164.19             8.83
                                                          165.0000
              08.10.2004        163.85             8.92
                                                          160.0000
              07.10.2004        163.51             9.08   155.0000
                                                          150.0000
              06.10.2004        163.45             9.08   145.0000
              05.10.2004        162.68             9.45   140.0000
                                                                                    31.10.2003
                                                                                    13.11.2003
                                                                                    26.11.2003
                                                                                    09.12.2003
                                                                                    22.12.2003
                                                                                    04.01.2004
                                                                                    17.01.2004
                                                                                    30.01.2004
                                                                                    12.02.2004
                                                                                    25.02.2004
                                                                                    09.03.2004
                                                                                    22.03.2004
                                                                                    04.04.2004
                                                                                    17.04.2004
                                                                                    30.04.2004
                                                                                    13.05.2004
                                                                                    26.05.2004
                                                                                    08.06.2004
                                                                                    21.06.2004
                                                                                    04.07.2004
                                                                                    17.07.2004
                                                                                    30.07.2004
                                                                                    12.08.2004
                                                                                    25.08.2004
                                                                                    07.09.2004
                                                                                    20.09.2004
                                                                                    03.10.2004
                                                                                    16.10.2004
                                                                                    29.10.2004
              04.10.2004        162.43             9.55
              01.10.2004        162.21             9.59
            30.09.2004         162.39             9.51
                                                                                                                                                        RUX-Cbonds Index YTM Year Performance
            30.12.2003         148.99
                                                          12.50
Index increment for
                                                          10.50
the month                       2.38%
Index increment for                                        8.50

year 2004                     11.60%
                                                           6.50
YTM change for the
                                                                  31.10.2003
                                                                                 14.11.2003
                                                                                              28.11.2003
                                                                                                             12.12.2003
                                                                                                                           26.12.2003
                                                                                                                                           09.01.2004
                                                                                                                                                        23.01.2004
                                                                                                                                                                     06.02.2004
                                                                                                                                                                                  20.02.2004
                                                                                                                                                                                               05.03.2004
                                                                                                                                                                                                             19.03.2004
                                                                                                                                                                                                                            02.04.2004
                                                                                                                                                                                                                                         16.04.2004
                                                                                                                                                                                                                                                      30.04.2004
                                                                                                                                                                                                                                                                   14.05.2004
                                                                                                                                                                                                                                                                                   28.05.2004
                                                                                                                                                                                                                                                                                                11.06.2004
                                                                                                                                                                                                                                                                                                              25.06.2004
                                                                                                                                                                                                                                                                                                                             09.07.2004
                                                                                                                                                                                                                                                                                                                                          23.07.2004
                                                                                                                                                                                                                                                                                                                                                       06.08.2004
                                                                                                                                                                                                                                                                                                                                                                    20.08.2004
                                                                                                                                                                                                                                                                                                                                                                                   03.09.2004
                                                                                                                                                                                                                                                                                                                                                                                                 17.09.2004
                                                                                                                                                                                                                                                                                                                                                                                                              01.10.2004
                                                                                                                                                                                                                                                                                                                                                                                                                           15.10.2004
                                                                                                                                                                                                                                                                                                                                                                                                                                        29.10.2004
month, b.p.                       -140




                                                                      11                                                                                                                                                                                                    prepared by Igor Sazonov
                                                                                                                                                                                                                                                                                      is@cbonds.info
Russian fixed income monthly                                                           11, 2004

Top News
PC Debt Securitizing – Will German Wait For Consensus With Russia?

Russia hopes that Germany will refrain from issuing credit notes on Russia’s Paris Club
debt, said Russian Finance Minister Aleksey Kudrin to reporters late October. He
emphasized that in the next two months Russia plans to negotiate restructuring of Russia’s
debt to Paris Club into market instruments or partial cash repayment with a discount.

By this the Minister responded to the contradictory news coming from Germany this
month where budget expert from the main opposition conservatives said that the country
planed to sell a further 5 billion euros (USD6.4 billion) of credit-linked notes backed by
Russian Paris Club debt next year whereas this July, when Germany sold almost 5 billion
euros of Aries credit-linked notes, backed by Russian Paris Club debts, German authorities
said it would not securities more debt in 2004. A few days later German finance ministry
spokeswoman later denied the plans of German side to sell any more of its Russian Paris
Club debt holdings.

“In view of recent information that Germany might issue bonds on Russia’s Paris Club debt
again, I can say that we hope that Germany will not go through with it”, - Mr. Kudrin stressed
out. "We must avoid the situation where other countries manage Russian debt," he added.

He said that the Russian Finance Ministry is in a constant dialog with the Finance Ministry
of Germany. These discussions target conditions under which Russia could swap its Paris
Club debt into market papers (Russian sovereigns) and partially pay the debt off with a
discount.

“This could allow us to settle these debts, avoid the situation in which other countries
would dispose of them, and have a better control over yields on the market”, - he said.

He added, that “the case with Germany is forcing us to seriously discuss possibilities of this
kind with the Paris Club – otherwise we will not be able to control our debt”.

Mr. Kudrin said that the Ministry intends to hold consultations on this matter within the
next two months. However, Russia has not made any official proposals yet, and the talks
are now at the stage of general ideas and principals. According to the Minister, it’s yet too
early discuss which part of the debt would be paid off in cash, and which – would be
swapped.

Mr. Kudrin mentioned, that on average Russia’s debt servicing costs 7% p.a., therefore
reduction of debt would be a very “efficient investment”. The minister emphasized that
Russia’s debt servicing costs are still too high: RUR266 bln in the budget of 2004, and
RUR254 bln (about USD9 bln) in the budget of 2005. He compared early redemption of
sovereign debt to other state investments in terms of efficiency. “In the last 10 years all
government investments, including those financed by credits and loans, were carried out with
either zero efficiency or at a loss, while only a few of them came out above zero. That is why
redemption of sovereign debt with release of servicing funds make the most efficient way out”, -
the minister said.

A source close to the Paris Club said that the Paris Club was scheduled to hold two more
meetings before the end of the year, in mid-November and mid-December, where the issue
could be discussed but Moscow had yet to propose something concrete.


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                                                                                    is@cbonds.info
Russian fixed income monthly                                                                           11, 2004


Russia remains a potential target for further repackaging deals by any of its large - mainly
European - creditors because of the large size of its bilateral debt. Moreover, the state has
not placed any international sovereigns since 1998, which has definitely helped to warm up
the appetites for Russian sovereign debt in the market.

29.10.2004 - Reuters
Berlin to Sell Debt?

Germany plans to sell a further 5 billion euros ($6.4 billion) of credit-linked notes backed by Russian Paris Club
debt next year, a budget expert from the main opposition conservatives said Thursday. A Finance Ministry
spokesman said no decision had been made. Last week, the ministry said Germany had the option to sell Russian
debt next year, but would have to hold bilateral talks with Moscow before doing so.

19.10.2004 - Reuters
Germany says no current plans to sell Russian debt

Germany has no current plans to sell more Russian debt next year, the government said on Tuesday, denying a
report it planned sales in 2005. "We are not currently planning any sales. The report is pure speculation," a
Finance Ministry spokeswoman said on Tuesday.

Separately, a spokesman at the ministry said Germany had the option to sell Russian debt next year, but would have
to hold bilateral talks with Russia before doing so and that no decision had been taken.

20.10.2004 - Reuters
Russia FinMin says early debt repayment "good idea"

Russia, whose coffers are full of export dollars, should consider the idea of early repayment of part of its $120
billion foreign debt, Finance Minister Alexei Kudrin said on Wednesday, calling the idea "very good". It would
allow Russia, which inherited about $100 billion of debt from the Soviet Union, to cut spending on interest
payments, he said.

21.10.2004 - Reuters
Russia opposes German issue of Russia-linked debt

Russian Finance Minister Alexei Kudrin said on Wednesday he hoped Germany would not issue any more credit-
linked notes backed by Russian debt. "In connection to reports that Germany is again prepared to issue Eurobonds,
linked to Russian debt to Germany, we hope Germany will not now do this," he told reporters.

The most important part of this initiative is possibility of directing revenues from high oil
prices for early redemption of external debt, since it is the most efficient and practical way.

High oil and commodity prices have left the Russian government in a strong financial
position. It has accumulated a sizeable oil stabilization fund, and analysts say any amount
over RUR500bn in the fund could be used for a debt buy-back. Russian government plans
to allocate more than RUR560 bln (USD19.24 bln) in a special fund created to collect
proceeds from high oil prices. By law, the government can only raid its savings for
purposes other than plugging budget deficits when they top RUR500 bln (USD17 billion).
According to analysts’ estimates, the fund is expected to reach RUR600 bln level by the
year-end.

USD100 Bln Reserves Level Left Behind. Is Second Investment Grade On The
Way?

For the first time in years Russia’s gold and foreign exchange reserves breached USD100
bln – the country hasn’t seen such abundance even in times of the USSR. On Thursday,
October 28, the Russian Central Bank announced that the country’s gold and foreign
currency reserves hit another a historic high at USD105.2 billion. The data shows that

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Russian fixed income monthly                                                         11, 2004

Russia’s has jumped two notches up on the list of countries with largest currency reserves.
Now Russia has world’s 7th largest currency reserves having outraced Singapore whose
gold and currency reserves have amounted to USD102.8 bln as of September 30.

Besides, the international reserves have almost reached the amount of external sovereign
debt (USD93.5 bln as of July1), and exceeded the annual import (USD75.4 bln last year).
The IMF considers it normal if reserves amount only to 3-4 months import of the country.

The international reserves started growing along with oil prices and increased almost by
seven times since 1999. Taking into account sky-rocketing oil prices, crossing the USD100
bln level was nothing but a matter of time. However, it seems like nobody expected it to
happen this soon. For instance, early in the year many analysts said that the reserves would
mount to USD80 bln by the year-end. In summer the experts of Standard & Poor’s
forecasted USD98 bln reserve by the year-end.

Reality exceeded all expectations. Moreover, USD100 bln reserves may finally enable
Russia to get an investment grade rating from the second leading rating agency Standard
& Poor’s. Goody’s made the upgrade to investment level already a year ago, but S&P and
Fitch still refuse to follow its example due to lagging of major reforms. In October both
rival agencies have expressed their opinions on this matter.

Helena Hessel, the leading analyst for Central and Eastern Europe at S&P, told the press
that while stockpiling FX reserves was not a substitute for reforms, it could eventually
expand Russia’s financial resources enough to make a rating upgrade possible. “Growth of
reserves is very important, - said Mrs. Hessel. – Increase in liquidity and easing of the debt
burden are no substitution to reforms, but at some point they can enhance Russia’s financial
potential enough to enable us to make an upgrade”.

“Growth of Russia’s international reserves is only one of the factors required for the rating
upgrade, Edward Parker”, - sovereign ratings Director at Fitch, echoed the colleague. “It is
just one of many factors. The increase of reserves from USD99 bln to USD105 bln is not that
significant by itself”, - he said, answering the question on possibility of Russia’s rating
upgrade following the growth of its gold and foreign exchange reserves.

In spite of rather stable and improving financial and macro situation, reflected in reserves
growth, Russian economy has certain structural flaws, such as week banking system,
Parker noted. Investors are still concerned about the business climate and status of
property rights in Russia, he added.




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                                                                                  is@cbonds.info
Russian fixed income monthly                                                                         11, 2004

External Debt Market
Upsized Issues

On Oct 8th Vneshtorgbank or VTB added USD100 mln to its 7-year euronotes due Oct
2011. Thus the issue amount was increased to USD450 mln that is close to USD500 mln
initially announced by the bank officials before the euronotes placement.

The notes were launched under issuer's EMTN programme rated Baa3 (Moody's), BB+
(S&P) and BB+ (Fitch).

Following are terms and conditions of a bond increased on Oct 8th:

Borrower: VTB Capital
Issue Amount: USD450 million
Maturity Date: October 12, 2011
Coupon: 7.50 pct
Issue price: Par
Lead Manager(s): Dresdner Kleinwort Wasserstein & Citigroup
Ratings: Baa3 (Moody's), BB+ (S&P), BB+ (Fitch)
Listing: Lux
Full fees: 0.45 pct
Governing: Law English
Negative pledge: Yes
Force Majeure: Yes
Cross Default: Yes
Notes Launched off issuer's EMTN programme

Earlier on Oct 1st Russia's second biggest bank, Vneshtorgbank (VTB) sold its 7-year
euronotes worth USD350 mln bond maturing Oct 2011. The bond carrying semiannual
coupon of 7.5% p.a. was placed at par that gave a spread of 370 bps over UST due 2011.
Dresdner Kleinwort Wasserstein and Citigroup acted as deal lead-managers. The issue was
placed through the bank SPV, VTB Capital S.A. The brief deal terms are listed below:

Proceeds from the issue will be used for general corporate purposes. The deal details are
given in our previous bulletin.

Early October Alfa-bank increased middle-term notes issue size by USD15 mln to USD190
mln. The notes were placed at par. This Sept the bank sold USD175 million worth of notes
maturing in 2006 with a semiannual coupon of 8%. The eurobonds were issued under the
bank’s ETMN programme worth USD400 mln. The issuer is Alfa Bank MTN issuance Ltd.
ABH Financial Limited; Alfa Bank itself will act as the issue guarantors. Co-lead managers
on the deal and whole programme are Merrill Lynch and UBS, which is also serving as the
sole bookrunner for the transaction. For the additional information on the deal see our
bulleting #10.

08.10.2004 - Cbonds
Alfa-Bank increased midterm notes amount by USD15 mln to USD190 mln

Alfa-Bank increased midterm notes amount by USD15 mln to USD190 mln. Alfa MTN Issuance Limited (Cyprus)
and Alfa MTN Market Limited will act as the issuers. Initially the bank placed notes worth USD175 mln at 99.482%
of par on September 23, 2004.


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Russian fixed income monthly                                                                       11, 2004

At additional placement the notes were sold at 100% of par. The notes carry 8% coupon to be redeemed on April
13, 2006. UBS Investment Bank managed the deal.

Initial placements

On Oct 13th Russian telecom operator Vimpelcom priced USD300 mln in debt financing
through notes issuance. It took Vimpelcom only one hour to place 7-year eurobonds with
8.375% p.a. coupon: the company favoured the market appetite for Russian corporate debt
observed on the market during last month. The booming demand during the bookbuilding
process allowed the borrower to decrease the cost of borrowing by 0.125 points – from
initially offered 8.5% p.a. to 8.375% p.a. that gave 463.7 bps spread over corresponding
UST.

The issue was about 7 times oversubscribed. The book for Vimpelcom notes amounted to
USD2 bln with 197 accounts involved. It’s worth to note that 64% of the issue was bought
by the investors new for the issuer. US investors bought 38% of the issue; UK took 18%;
8% went to Germany; 5% - to Switzerland, rest countries took 15% of the issue amount.
By investor type 66% of the issue went to Asset Managers; 20% - to Banks; 8% - to Private
Banks and 15% - to Insurance Companies.

Thus, the issue terms are as follows:

Borrower: Vimpelcom
Issue Amount: USD300 million
Maturity Date: October 22nd, 2011
Coupon: 8.375% p.a.
Issue price: 100
Reoffer price: 100
Spread over UST: 463.7 bps
Payment Date: Oct 22nd 2004
Lead managers: J.P. Morgan and UBS
Ratings: BB- (S&P), B1 (Moody’s)
Listing: Lux
Governing Law: English
Negative pledge: No
Force Majeure: No
Cross Default: No

14.10.2004 - Cbonds, Vedomosti
Vimpelcom placed notes worth USD300 million

Vimpelcom, Russia's second-largest mobile phone company, sold USD300 million of notes yesterday. The notes
were sold with a coupon of 8.375 percent yielding 4.637 percentage points over the US Treasuries. The sale was
jointly led by J.P. Morgan and UBS. The notes are rated ‘BB-’ by S&P and ‘B1’ by Moody’s.

According to the company data, the proceeds from the issue will go to acquire new cellular
operators in Russia and CIS, to upgrade production facilities, to construct new networks
and to partially re-finance the first eurobonded loan. The company press service said it
plans to use the proceeds to repay a portion of its USD250 million of debt due in April 2005
and to develop its networks. This could include acquisitions, it added.

In August Vimpelcom bought Kazakh telecoms company Kar-Tel for USD350 million plus
the assumption of about USD75 million in debt. Vimpelcom's 2004 capex of $1.142 billion
does not include acquisition costs.
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                                                                                               is@cbonds.info
Russian fixed income monthly                                                                         11, 2004


On Oct 19th one of Russia's biggest banks, Promsvyazbank, placed its USD100 million 2-
year eurobond at 10.25 percent (upper guidance range limit, named by the leads (ING and
UBS)). The issuer, which shelved the launch of the ING- and UBS-led bond from mid July
due to turmoil in the Russia’s local banking sector, had originally planned a three-year
USD200 mln issue. This time the bond was placed at a spread of 772 basis points over
corresponding UST.

The issue generated the book amounting to USD138 million with about 50 accounts
involved. As for the investors’ geographical distribution, UK bought 34 percents, Swiss - 13
percents, U.S. offshore accounts took 14 percents, Asia –7 percent and Russian companies
bought 27 percents of the issue. By investor type Funds and Assets Managers bought 33%,
Banks and other Financial Institutions – 43%, Private Banks took 24%

Thus, the issue terms are as follows:

Issuer: Promsvyaz Finance S.A.
Borrower: Promsvyazbank
Issue Amount: USD100 million
Maturity Date: October 27, 2006
Coupon: 10.25 pct (semiannual)
Payment Date: October 27, 2004
Issue price: Par
Reoffer price: Par
Spread: 772 bps over the UST
Lead Manager(s): ING and UBS
Ratings: B1 (Moody's), B- (S&P), B (Fitch)
Listing: Lux
Denoms: 50,000
Governing Law: English
Negative pledge: Yes
20.10.2004 - Bloomberg
Promsvyazbank sold USD100 mln eurobond

Promsvyazbank, a Moscow-based bank established to serve the telecommunications and transport industries, raised
$100 million in its first international sale of bonds, half the amount the company initially planned. The bonds,
maturing in two years, were priced to yield 10.25 percent, said Artyom Konstandyan, the bank's head of
international finance, by telephone. UBS and ING managed the sale.

Another Russia's large banks, Rosbank, priced a five-year USD225 million eurobond on
Oct 25th through its SPV - Russian International Card Finance vehicle, lead managers said.
The issue was sold at par with a coupon of 9.75 percent, and the order book reached
USD400 mln. The issuer has reduced the borrowings size from initially planed USD275 mln
at that. About 25% of the issue was bought by investors from South-East Asia, 25% -
Continental Europe, and 10% - Russian investors.

The transaction is rated Ba3 by Moody’s Investors Service and B plus by Fitch.

The main deal terms are listed below:

Borrower: Russia International Card Finance S.A.
Issue Amount: USD225 million
Maturity Date: September 24, 2009
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                                                                                                is@cbonds.info
Russian fixed income monthly                                                         11, 2004

Coupon: 9.75 pct
Issue price: Par
Reoffer price: Par
Payment Date: November 3, 2004
Lead Manager(s): Credit Suisse First Boston & Merrill Lynch
Ratings: Ba3 (Moody's), B+ (Fitch)
Listing: Lux
Full fees: Undisclosed
Denoms: (K)100-1
Governing Law: English
Negative pledge:Yes
Force Majeure: IPMA 2
Cross Default: No
Notes: Borrower is Rosbank, Servicer is United Card Service Private Company

Rosbank's issue is secured by the bank card payment claims to Visa, MasterCard and
Cirrus Maestro payment systems. Credit Suisse First Boston and Merrill Lynch are lead
managers of the deal. Rosbank had already made a decision to place eurobonds in summer
of 2004, but the issue was postponed due to unfavorable market conditions and Russian
bank sector crisis.

In August of 2003 when Rosbank announced its intentions to launch eurobonds worth
USD200-250 mln, secured by financial flows on plastic cards in Rosbank’s processing
company United Card Service, the bank’s management believed that the unique (for
Russia) structure would help reduce borrowing costs and obtain a rating for the debut
bonds above sovereign.

Indeed, the fact that all the payments are collected before they hit Russia definitely could
be seen as cross-border risk mitigating factor. Having also in mind that Rosbank controled
more than 90 per cent of the market for foreign Visa and Master card transactions in
Russia the hopes of the bank management looked not so groundless.

However, these hopes failed, to some extent. Fitch assigned the issue a B+ rating (while
sovereign is BB+), and Moody’s – even a lower one – Ba3 (sovereign Baa3). Securitization
did not help much in decreasing the rate, although, the bank itself sees the deal as quite
successful. The bank is satisfied with its debut placement. Alexander Popov, the member of
Rosbank’s BoD, considers placement results “very good”. “The international capital market
has been in its best condition since May, and we were awaiting for the most opportune moment”,
- Popov says. He explains the long preparation period by “the unique structure of the deal,
which required a serious legal preliminary work”.

The main reason is likely to lie in the volatility in the Russian banking system and unstable
performance of recent international bonds from Russian banks resulting from it. Rosbank
fell the next victim to foreign investors’ negative attitude to private Russian banks, whose
creditworthiness leaves much to be desired. And amidst the recent issues of MDM-Bank,
Alfa-Bank and Promsviazbank, whose yields were significantly above that of the corporate
borrowers and state-owned banks, the Rosbank deal looks really not so bad.
26.10.2004 - Reuters
Rosbank prices USD225 mln 2009 Eurobond -leads




                                                 18                     prepared by Igor Sazonov
                                                                                  is@cbonds.info
Russian fixed income monthly                                                                          11, 2004

Rosbank, one of Russia's largest banks, priced a five-year $225 million eurobond on Tuesday through the Russian
International Card Finance vehicle, lead managers said. The issue was priced at par with a coupon of 9.75 percent
and an order book that topped $400 million. The average life of the bond is expected to be 3.2 years.

Market performance

As it could be seen from the table 3 Russian eurobond market showed substantial growth
during last month: EMBI+ Russia tightened by 38 bp whereas yields of the most of the
Russian debt papers outstanding decreased by 70 bp on average (table #5). In fact Russian
eurobonds outperformed the most of EM debt market papers this month. Russian
benchmark having opened the month at 96.34% of par level has been traded above the par
during last week of October. Amidst relatively stable Treasuries (average yield decrease of
10 bp) the Russian external debt was generally supported by oil prices remaining on
historical highs and good macroeconomic figures.

Moody’s decision to upgrade Russian sovereign outlook was also a crucial factor for the
market to rise; Russian corporate eurobonds followed sovereign debt and even
outperformed it due to the (to some extent) unexpected rating agency decision to assign the
unsecured issues 2 state-owned banks Sberbank and VTB the ratings a notch above the
sovereign one. Oil prices and Moody’s actions – these two factors were strong enough to
overcome the negative impact of uncertainty related to the plans of Germany to issue more
ARIES-like bonds in the nearest future.

With UST yield remaining in the range of 4-4.3% before year-end and oil prices continuing
to stay on the current levels we could expect Russian country spread to narrow in the
nearest future. As for mid-term perspectives, having in mind resent statements of S&P and
Fitch representatives welcoming Russia’s Stabilisation Fund growth and country’s
economic results in general we couldn’t rule out the second rating upgrade to the
investment level in 1H 2005.

PC Club early repayment talks could be viewed both as positive and negative factor due to
the high level of uncertainty regarding their outcome: on one hand, the Russia’s
government intentions to redeem the debt before the schedule definitely supports the
country external debt market. On the other hand, no one could say whether the patience of
European creditors be enough to wait and to refrain from covering the budget deficit (3%
of GDP EU requirements) by means of ARIES like issuance. We view the second scenario
as quite pessimistic and less probable one, so we expect Russian benchmark to be within
99-101% of par range given all other things equal.

Corporates performance was less volatile than sovereigns last month. As before, telecoms,
metallurgy and oil companies were among the leaders. Sibneft was a specific case once
more with not just oil prices but property issues as well (return of 57% of shares owned by
Yukos followed by S&P decision to remove the company from Credit Watch list). Bank
sector moved along with the market trend in October, UralSib Bank due 06 and Alfa Bank
due 05 were the exceptions with the spreads tightened by 110 bp and 95 bp respectively. As
for the Russian external corporate debt perspectives, we should note that corporates are
traded with a record low spreads to the sovereigns (circa 90 bp vs. 175 bp sread this July).
Thus, further growth will be constrained to greater extent. Moreover, due to the non-
dedicated investors inflow to the Russian corporate debt market (pointed out by JP
Morgan bank) we could expect the volatility on the market to increase. We recommend
defense strategy with the focus on relatively reliable issuers (with a rating of BB- and
above). Regarding the growth rates in Russian telecommunication sector and favorable
market perspectives in general we prefer to stay in the papers of this sector. Oil producing
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                                                                                                 is@cbonds.info
Russian fixed income monthly                                                                               11, 2004

industry with TNK 07 and both Sibneft external issues has a good value from our pint of
view. Sberbank and VTB bonds look good from middle-term perspective regarding the fact
that recent ratings upgrades were not priced in yet.

Issues to come
(see the table section also, table#3)

The second attempt of Alrosa

On Friday October 22, 2004, the BoD of Alrosa diamond-mining company reached a
decision to release and place one or more issues of eurobonds of Alrosa Finance S.A. The
bonds worth USD800 mln at par will be guaranteed by AK ALROSA, the company’s
statement says. The BoD determined the maximum coupon size and the interest rate under
the loan agreement between AK ALROSA and Alrosa Finance S.A., the statement says.

The issue timing will be determined after the BoD’s approval. “But the sooner the better –
the markets a favorable now”, - the source in the company BoD said, adding that the
company hopes to make the placement before the year-end.

JP Morgan Securities and ING Bank N.V. London will lead-manage the deal.

The company waited out the summer lull on international markets and is now getting
ready to place 10-year eurobonds worth USD800mln. Analysts say that the diamond
monopoly needs to make the placement before the year-end, to make sure the loan costs no
more than 9% p.a. A marketing roadshow began late October in Europe and then Asia
with the expected finish in New York on Monday Nov. 8. Pricing of the bond is expected
soon thereafter.

Last year in spring Alrosa launched its debut 5-year eurobond issue worth USD300 mln. At
that time the analysts called the placement a success, as the bonds yielded 8.1258% p.a.

The company will use the proceeds for debt refinancing. According to the source in Alrosa,
the company’s outstanding short-term debt currently amounts to around USD300mln,
while the overall debt is estimates at USD1.2bln. The company intends to decrease its debt
to USD1.1bln by the year-end. Alrosa’s share in the global diamond production is 25%;
last year it produced diamonds worth USD1.5bln. Its IFRS revenue amounted to
RUR60bln, net revenue – RUR6.35bln. The Russian government owns 37% of the
company’s tock, the government of Yakutia - 32%, employees – 23%, and uluses (districts)
of Yakutia – 8%.
02.11.2004 - Reuters
Russia's Alrosa plans 10-year Eurobond-sources

Russian state-owned diamond monopoly Alrosa plans to sell a 10-year Eurobond next week, with the market
expecting the size of the issue will be in the $500 million area, sources said on Monday. "Alrosa has approval to
issue up to $800 million, but that is all that says," said the source with knowldedge of the deal, who added that there
is no price guidance yet.

ING and JP Morgan are joint lead and bookrunners on the deal.

Following Gazprom. Rusal To Launch Credit Notes On Security Of Its Export Revenue

Rusal can become the second Russian company after Gazprom to issue a loan with
international investors on security of its own export revenue. Rusal’s debut placement

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                                                                                                      is@cbonds.info
Russian fixed income monthly                                                                           11, 2004

worth USD200-300 mln is scheduled for the first half of 2005. The bonds will be placed
amid the limited number of investors and have 7-year tenor. Citigroup will lead the deal
and the proceeds would be used to refinance part of the company's debt of around USD2.3
billion.

As Rusal’s Corporate Finance Director Oleg Mukhamedshin said the notes would not be
traded on the stock exchange, one holder would still be able to sell them to the other. He
did not name the company of Rusal group that would become the notes issuer. Rusal’s top
manager notes, that for the issue the company intends to obtain a credit rating from one of
the international rating agencies.

Citigroup will manage the deal.

The experts say that this step will lead to increased transparency of Rusal, as it will have to
reveal its IFRS accounts to a wide range of investors. Rusal is considered one of the least
transparent Russian companies: even its consolidated IFRS accounts have never been open
to public. But next year it may change.

So far Rusal has been refinancing its debts by raising cheaper bank credits. In April it
signed an agreement with a group of foreign banks on a syndicated loan worth
USD800mln. Yesterday it was announced the deal syndication was finally completed. The
credit consists of two equal tranches – 3-year at LIBOR+2.625% and 5-year at
LIBOR+3.25%. But Mr. Mukhamedshin says that issuance of notes will enable the
company to raise “cheaper” money. “This will be a longer-term and cheaper loan than
eurobonds, CLN or bank credits”, - he explains. Besides, this will allow Rusal to enter a new
debt market, added he.

The company does not specify what information it will disclose to investors. But the experts
are convinced that, at least IFRS accounts will be submitted for sure. “They won’t be able
to place the loan without IFRS accounts. They might even have to reveal their
stockholders”, - suggests Konstantin Pavlov from Zenit Bank.

Rusal is the third largest aluminum producer in the world. Rusal’s plants produced
2.58mln tons of aluminum in 2003. Its revenue in 2003 amounted to USD4.5 bln. 75% of
Rusal stock is controlled by Basic Element, the company of Oleg Deripaski, and another
25% is managed by Millhouse Capital.

RUSAL has 2 domestic bonds outstanding - 3-year bonds worth RUR3 bln (placed Sept. 11,
2002) and 4-year bonds worth RUR5 bln (placed May 20, 2003).
13.10.2004 - AK&M, Reuters
RUSAL to place export earnings-secured bonds for USD200-300 mln

OAO Russian Aluminium (RUSAL) intends to release export earnings-secured bonds for a total of $200-300 mln,
sources with the company informed. The bonds will be placed amid the limited number of investors to float for over
7 years. The firm's head of corporate finance, Oleg Mukhamedshin said that the seven-year notes would be
organised by Citigroup and the proceeds would be used to refinance part of the company's debt of around $2.3
billion.

RUSAL also planned to improve transparency and obtain a credit rating with international ratings agencies before
the issue.

13.10.2004 - Reuters
RUSAL closes $800 mln loan syndication


                                                         21                             prepared by Igor Sazonov
                                                                                                  is@cbonds.info
Russian fixed income monthly                                                                            11, 2004

Russia's top aluminium firm RUSAL has successfully closed the syndication of an $800 million pre-export finance
facility, lead arrangers BNP-Paribas and Citigroup said on Tuesday. "The loan is split equally into 2 amortising
tranches of 3 and 5 years and its proceeds will be used for refinancing of RUSAL's existing indebtedness," the banks
said in a statement.

They said it was the largest loan facility ever arranged by RUSAL and the largest metals and mining syndicated
term loan arranged to date in Russia.

Other banks participating in the syndication are ABN AMRO, Barclays, Commerzbank, HSBC, ING, Moscow
Narodny Bank, Natexis Banques Populaires, Standard Bank London, UFJ Bank, Bayerische Landesbank, KfW,
Raiffeisen Zentralbank Austria, Sumitomo Mitsui Banking Corporation, Caterpillar Financial, Credit Suisse Trade
Finance, DZ BANK, Erste Bank, Landesbank Rheinland-Pfalz, BAWAG, Ost-West Handelsbank, and Rosbank
(Geneva).

This month Russian Railways set time range for its proposed eurobond placement: the
company chief executive Gennady Fadeyev named late 1H of 2005 as a most possible time
for the bond launch.

As it was informed earlier, the issuer expected issue size is between USDD500 mln and
USD1 bln, with maturity of between 5 and 10 years. “If next year we issue USD500 mln to
USD1 bln, we shall consider it a “success”, - the company representative told the press.
According to him, Russian Railways forecasts the eurobonds’ yield on the same level with
that of Gazprom’s securities.

Previously the company’s CEO Gennady Fadeyev mentioned indefinably, that the
borrowed funds will be used for infrastructure development.

He also said that eurobonds will be their next step on the loan market. In summer Russian
railways obtained a BB+ long-term foreign currency rating form S&P, and an AA+ rating
on the national scale with a stable outlook (later changed to positive), in order to be able to
raise funds abroad on the most favorable terms. This means that the railroad monopoly
has the highest rating available to a Russian company on this stage. Transneft, Sberbank
and Vneshtorgbank are the only three companies in the country with ratings this high.
01.10.2004 - Bloomberg
USD500 mln RZD Bond expected at late 1H 2005 - company

Russian Railways Co., or RZD, will sell $500 million of eurobonds in 2005 to fund plans to build new rail links and
upgrade ageing equipment, chief executive Gennady Fadeyev said. The country's railway monopoly will sell the
bonds at the end of the first half of next year, Fadeyev said at a news conference. He said two banks were chosen to
organize the sale and declined to identify the institutions.

Russian steel maker, EurazHolding, may release eurobonds next year. “The final plan of
activities will depend on the market conditions”, - the company CEO said at the first joint
meeting of the Russian-Chinese business council. “Asian investors are highly interested in the
company’s bonds worth USD150 mln”. As reported earlier, Credit Suisse First Boston and
ING Group NV will manage the deal.
15.10.2004 - Cbonds
EurazHolding to place eurobonds in 2005 and launch plant construction in China

The EurazHolding Group, the biggest steel company in the country, may release eurobonds next year. It also intends
to expand exploration in eastern Russia and build a metallurgical plant in China, said the company’s CEO
Alexander Abramov in an interview in Pakistan.

Meanwhile, Russia’s third largest telecom – MegaFon that has approved USD375 mln issue
in Sept, got USD238 mln from Citibank and ING Bank
                                                          22                              prepared by Igor Sazonov
                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                            11, 2004


Previosly, MegaFon has announced plans to issue a debut USD375 million 5-year
Eurobond in the fourth quarter of 2004 with ING Bank and Citibank acting as leads. The
company representative said earlier that they expected the bond to yield less than 10
percent with a maturity between 5 and 7 years
26.10.2004 - Reuters
Russia's MegaFon to get USD238 mln in loans

Russia's third largest mobile phone services provider, MegaFon, plans to receive a total of $135 million in credits
from Citibank and ING Bank, the company said on Tuesday. A MegaFon spokeswoman said the company planned to
use the money to buy equipment from Nokia.

MegaFon said in a statement that in the middle of September it had raised another $53.4 million from Citibank and
ING Bank for export financing. MegaFon, which has budgeted 2004 capex at $800 million, has also received a $50
million 5-year credit line from Russia's biggest bank, Sberbank. The line was extended at 12 percent annual.

MegaFon plans to spend $1.2 billion on development and the construction of networks. It hopes to raise its
subscriber base to 14 million this year from 6.35 million at the end of last year.

One of the regional Russian telecoms, Uralsvyazinform, may also release eurobonds worth
USD150-USD200 mln in summer of 2005, as Sergei Kuzyaev, deputy GD of
Uralsvyazinform, said. The bond maturity may be from 3 to 5 years. The funds will go to
implement investment program of the company and to restructure short term loans.

Uralsvyazinform is Urals Region's telecom major. Svyazinvest holds a majority stake of
voting stocks.

28.10.2004 - Reuters
Uralsvyazinform plans USD150-USD200 mln Eurobond in 2005

Russian regional telecom Uralsvyazinform plans to issue $150-$200 million in Eurobonds in the early summer of
2005, an executive said on Wednesday. "We are thinking about issuing Eurobonds. We need $150-$200 million to
fund our investment plans," Deputy Chief Executive Sergei Kuzyayev told Reuters.

He added that Uralsvyazinform, which serves the Urals region, would prefer a five-year issue but a three-year
maturity "wouldn't be bad either". Uralsvyazinform plans to invest 8 billion roubles ($278.2 million) next year. To
fund that, it plans to issue 2 billion roubles in domestic bonds and cover the rest with the Eurobonds and other
short-term credits.




                                                         23                              prepared by Igor Sazonov
                                                                                                   is@cbonds.info
Russian fixed income monthly                                                                             11, 2004

Domestic Debt Market
GKO-OFZ market

The Russian Finance Ministry raised RUR121.08 bln with new domestic securities issues in
January- September - half of its 2004 domestic debt market borrowing with the net
borrowing on the domestic debt market at RUR61.9 billion in the nine months period, the
Ministry said. The ministry raised RUR3.92 billion with GKO T-bill issues, RUR25.04
billion with OFZ-FK fixed coupon yield Federal Loan Bonds and RUR92.12 billion with
OFZ-AD amortized bonds. This included RUR52.37 billion at primary auctions and
RUR68.71 billion with additional placements on the secondary market. Principal debt
payments on GKO-OFZ totaled 59.18 billion rubles.

Beaver Bonds: Good For CB, Inert For The Market

Long awaited OBR (beaver) bonds are unlikely to be an attractive investment opportunity
in the nearest term. The Central bank first deputy chairman Konstantin Korishchenko
said the bank was satisfied with the OBR auction results and did not want the OBR yields
to appeal to foreign investors since this could create additional unwanted upward pressure
on the rouble.

He added that in the bank view the OBR auction should not set any lead for the rouble
exchange rate, which is tightly managed by the central bank and had a long period of
relative stability over the last years. To curb rouble growth and liquidity spurred by record
oil export earnings remains the main aim of the CB in OBR issuance.
06.10.2004 - Interfax
OFZ-AD 46002 yields 7.99% at auction

Average-weighted yield at Wednesday's auction for additional OFZ-AD 46002 series amortized Federal Loan
Bonds maturing in 2,863 days was 107.3281% of face value or 7.99% annually. The Central Bank's financial
markets operations department said a total of 3.905 billion rubles of the 4 billion rubles in paper offered was sold.
Demand was 1.679 billion rubles.

The cut-off price was 107.181% of face value.

08.10.2004 - Interfax
OFZ-AD 46003 yields 7.55% at auction

Average-weighted yield at Friday's auction for additional OFZ-AD 46003 series amortized Federal Loan Bonds
maturing on July 14, 2010 was 7.55% annually. The bonds were auctioned for 111.0924% of their face value. The
Moscow Interbank Currency Exchange (MICEX) said on its website that a total of 431.797 million rubles of the 2
billion rubles in paper offered was sold. Demand was 2.906 billion rubles at face value.

The cut-off price was 111.05% of face value, equivalent to yield of 7.56% annually.

08.10.2004 - Interfax
OFZ-AD 46014 yields 7.82% at auction

Average-weighted yield at Friday's auction for additional OFZ-AD 46014 series amortized Federal Loan Bonds
maturing on August 29, 2018 was 7.82% annually. The bonds were auctioned for 106.0576% of their face value.
The Central Bank's Financial Markets Operations Department said a total of 1.892 billion rubles of the 2.5 billion
rubles in paper offered was sold. Demand was 4.302 billion rubles at face value.

The cut-off price was 105.85% of face value, equivalent to yield of 7.85% annually

15.10.2004 - AK&M

                                                          24                              prepared by Igor Sazonov
                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                             11, 2004

The Bank of Russia placed bonds worth 1.782 bln rbl vs. 3 bln rbl offered

The Central Bank of Russia (CBR) has placed on MICEX today, Oct. 15, the bonds worth 1.782 bln rbl vs. the offer
of 3 bln rbl, the CBR said. The demand stood at 5.063 bln rbl. Weighted average yield was 5.19% on year, weighted
average price - 96.303% par value. The cut-off price stood at 96.296% par, corresponding to 5.2% annual yield.

The registered number is 4-01-30BR0-4, bond par - 1,000 rbl, term before maturity - 281 days.

On Oct. 6, the CBR placed bonds worth 16.02 bln rbl vs. the offer of 34 bln rbl. The demand was 16.7 bln rbl, raised
funds - 15.37 bln rbl, weighted average yield - 5.54% on year, weighted average price - 95.907% par.

On Sept. 16, 2004, the CBR placed bonds worth 34.513 bln rbl vs. the demand of 50 bln rbl, weighted average yield
was 1.7% on year, weighed average price - 99.9488% par.

18.10.2004 - Interfax
Ministry places 1.16 mln rubles in OFZ

The Russian Finance Ministry placed an additional 1.61 million rubles in series 27026 OFZ Federal Loan Bonds at
secondary trading on Friday, the Central Bank's Financial Markets Transactions Department said.

Now, a total of 5.961 billion rubles in OFZ 27026 are in circulation.

20.10.2004 - Interfax
OFZ-AD 46014 cut-off price 105.3% at auction

The cut-off price for OFZ federal loan bonds with amortized debt (OFZ-AD) series 46014 (redeemable August 29,
2018) was 105.3% of face value at Wednesday's additional placement auction.

That price corresponded to annual yield of 7.93%. The average weighted price was 105.4076% of face value,
corresponding to annual yield of 7.91%.

The Central Bank reported that 1.063 billion rubles worth (face value) of the bonds sold of a 5 billion-ruble offer,
against demand for 3.160 billion rubles worth (face value).

Thereby, there is now 36.938 billion rubles worth of OFZ 46014 in circulation.

20.10.2004 - Interfax
OFZ-AD 46003 cut-off price 110.565% at auction

The cut-off price for OFZ federal loan bonds with debt amortization (OFZ-AD) series 46003 (maturing July 14,
2010) was 110.565% of face value at Wednesday's auction.

That price corresponded to annual yield of 7.65%. The average weighted price was 110.698% of face value,
corresponding to annual yield of 7.62%.

The Central Bank reported sales of 1.734 billion rubles worth (face value) of a 5 billion-ruble offer, against demand
of 2.745 billion rubles (face value).

Thereby, there is now 28.977 billion rubles worth of OFZ 46003 in circulation.

21.10.2004 - Interfax, Cbonds
Central Bank bonds yield - 4.88% at auction

Average-weighted yield at Thursday's auction for series 04001 OBR Bank of Russia Bonds with buy-back on July
15, 2005 was 4.88%. The bonds were auctioned for 96.5668% of their face value.

The Central Bank's Financial Markets Operations Department said a total of 1.697 billion rubles of the 3 billion
rubles in paper offered was sold.

Demand at market value was 4.696 billion rubles.

The cut-off price was 96.516% of face value, corresponding to yield of 4.95% annually.

                                                          25                              prepared by Igor Sazonov
                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                              11, 2004


Thus, the issue RU000A0DCEG3 placement terms are as follows:

Announced value: 3 000 mln. RUR
Settlement date: 18 October 2004
Buy back date: 15 July 2005
Maturity date: 15 December 2005
Aggregate demand to buy back amount at par: 4 695,748 mln. RUR
Placed value to buy back amount at par: 1 696,631 mln. RUR
Minimal accepted price: 96,5160%
Yield at minimal accepted price: 4,95% per annum
Weighted average price: 96,5668%
Yield at weighted average price: 4,88% per annum

25.10.2004 - Interfax
MinFin additionally places OFZ Friday

The Russian Finance Ministry additionally placed OFZ series 46014 in the amount of 137.704 million rubles at face
value during secondary trading on Friday, the Russian Central Bank's financial markets department said in a
statement.

As a result, the total volume of OFZ 46014 in circulation has increased to 37.075 billion rubles.

27.10.2004 - Interfax
Avg OFZ-AD 46014 yield an annual 7.85% at auction

Average weighted yield on federal loan bond issue OFZ-AD 46014 (maturing August 29, 2018) at Wednesday's
additional placement auction was 105.804% of face value, corresponding to an annual 7.85%.

The Central Bank reported that 988.032 million rubles worth (face value) of the paper sold from an offer of 2 billion
rubles worth (face value). The cut-off price was set at 105.7113% of face value.

28.10.2004 - Interfax
Avg OFZ-FD 27026 yield an annual 7.31% at auction

Average weighted yield on federal loan bond issue OFZ-FD 27026 (maturing March 11, 2009) at Wednesday's
additional placement auction was 100.335% of face value, corresponding to annual yield of 7.31%.

The Central Bank reported that 1.340 billion rubles worth (face value) of the paper sold from an offer of 1.5 billion
rubles worth (face value). The cut-off price was set at 100.32% of face value.

28.10.2004 - Reuters
Russia Central Bank sells RUR1.33 bln OBR bonds

Russia's central bank sold 1.33 billion roubles ($46 million) of a 3 billion rouble issue of zero-coupon OBR bonds
on Thursday at an average yield of 4.67 percent, to a put option on July 15, 2005.

At an auction last week it sold 1.696 billion roubles of a same-sized issue at an average yield of 4.88 percent to the
same date.

The central bank provided the following details for the auction:
Issue number: 4-01-30BR0-4
Issue volume: 3.0 bln roubles
Bids (nominal): 2.82 bln roubles
Funds raised: 1.29 bln roubles
Average price: 96.792 percent of par
Cut-off price: 96.739 percent of par
Average yield: 4.67 percent
Cut-off yield: 4.75 percent
Buyback date: July 15, 2005



                                                           26                              prepared by Igor Sazonov
                                                                                                     is@cbonds.info
Russian fixed income monthly                                                                           11, 2004

Municipal bond market
(only issues with outstanding volume more than RUR1bln (USD 30 mln) are included)

Year end is always a hot time for the Russian municipal debt market. This year the
primary market is also boosted by the long summer period of inactivity caused by the bank
crisis in Russia. In October 7 municipals tapped the market with the issuance totaling
RUR13.53 bln – the new market record (the previous one – RUR11.264 bln was set on Apr
2004).

Early October Moscow City once again tapped domestic debt market by a doublet. This
time 37- and 39-series domestic city bonds worth total of RUR8.9 bln were sold on Oct 6th.

The 37-series issue was placed in amount of RUR3.9 bln, and the 39-series issue – in
amount of RUR5 bln.

The auction on the 37-series domestic municipal bonds of the City of Moscow (state
registration # RU25037MOS) saw 167 bids worth total of RUR9.368 bln on October 6,
2004.

The bonds were placed in amount of 3,900 pieces with par of RUR1,000 each. The
registered issue size equals RUR4 bln. Cut-off price (excluding accrued coupon interest)
was at 104.350% that corresponds to the yield of 7.81% p.a. Weighted average price
(excluding accrued coupon interest) was set at 104.449% (YTM - 7.76% p.a.).

Previously the city's representatives forecasted the yield at the auction at 8.2% at most.

The bonds were sold in total amount of RUR4,073,494,971 (excluding accrued coupon
interest).

of the City of Moscow (state registration # RU27039MOS) was auctioned on MICEX on
October 6, 2004.

The City offered RUR5 bln of 39-series issue (from RUR10 bln registered issue amount).

The auction saw 281 bids worth RUR11.684 bln (excluding accrued coupon interest). The
cut-off price (excluding accrued coupon interest) was set at 103.40% of par. Weighted
average price (excluding accrued coupon interest) equaled 103.77% of par. that implies
cut-off yield at 8.48% p.a. and weighted average yield at 8.42% p.a. respectively.

Thus, 100% of the offering (5,000,000 bonds) were placed at the auction in total amount of
RUR5,188,494,820.50 (excluding accrued coupon interest).
07.10.2004 - Cbonds
Weighted average yield on 37-series domestic issue of the City of Moscow at 7.76%

Weighted average yield on 37-series domestic municipal issue of the City of Moscow was set at 7.76% p.a. at the
auction. The issue was placed in total amount of RUR3.90 bln, as informed by a representative of the Mosfinagency.

The results of the auction are as follows:

Issue # RU25037MOS
Total issue size: RUR4 bln
Amount placed: RUR3.9 bln
Par: RUR1,000
Bonds' tenor: December 23, 2003 – September 23, 2006
                                                         27                             prepared by Igor Sazonov
                                                                                                  is@cbonds.info
Russian fixed income monthly                                                                            11, 2004

Book size: RUR9.37 bln
Placement size (at par): RUR3,900 mln
Placement size (excluding accrued coupon interest): RUR4,073,49 mln
Cut-off price (excluding accrued coupon interest): 104.350%
Weighted average price(excluding accrued coupon interest): 104.449%
Cut-off yield: 7.81% p.a.
Weighted average yield: 7.76% p.a.
The coupon is redeemed quarterly at the rate of 10% p.a.

07.10.2004 - Cbonds
Weighted average yield on 39-series domestic bond issue of the City of Moscow was set at 8.42% p.a.

39-series issue of domestic municipal bonds of the City of Moscow (state registration # RU27039MOS) was
auctioned on MICEX on October 6, 2004. The City offered 5,000 thousand bonds. Bonds’ par - RUR1,000 each.

The cut-off price (excluding accrued coupon interest) was set at 103.40% of par. Weighted average price (excluding
accrued coupon interest) equaled 103.77% of par.Cut-off yield - 8.48% p.a.Weighted average yield - 8.42% p.a.

The Krasnoyarsk Region fixed-rate domestic bond issue was placed on MICEX on October
20, 2004. Rosbank acted as the issue general agent, arranger, underwriter and paying
agent. The co-underwriters are as follows: BK Region, Eurofinance Mosnarbank, Aton,
Vneshtorgbank, Spurt, Sibirgasbank.

The first coupon rate was set by the issuer at tender at 10.95% p.a. (close to the low range
of the experts estimations, so the investors were more positive towards the paper than the
analytics did), which corresponds to effective redemption yield of 11.4% p.a. 55 bids were
met; the issue was placed in full amount. The investors had a healthy appetite for the
bonds, as they made 197 bids worth RUR3,919,125, with rates ranging from 8% to 12%
p.a.

The par value of the issue size equals to RUR1.5bln. The bonds have a 2-year tenor, and 3-
months coupon period. 2-8 coupon rates are equal to the first coupon. The issue was placed
at 100% of par.
21.10.2004 - Cbonds
The domestic bond issue of the Krasnoyarsk Region fully placed; coupon rate – 10.95% p.a.

The fixed-rate bond issue of the Krasnoyarsk Region has been placed on MICEX on October 20, 2004. The first
coupon rate was set by the issuer at tender at 10.95% p.a., which corresponds to effective redemption yield of 11.4%
p.a. 55 bids were met; the issue was placed in full amount.

In October Yakutia has completed the placement of its series 25005 domestic 3-year issue
totaled RUR2 bln. The bonds were placed in two tranches. The first tranche worth
RUR1,000 mln was fully placed in April 2004. The second tranche worth RUR1,000 mln
was placed on October 8, 2004. ROSBANK acts as the deal arranger, chief underwriter,
market-maker and paying agent.

The bond issue has a term of three years and pays a quarterly coupon. The first two
coupons are set at 11%, coupons 3-6 at 10%, coupons 7-10 at 9%, and coupons 11-12 at
8%. Ak Bars Bank and Russian Funds Investment Group are acting as the underwriters.
08.10.2004 - Cbonds
The Republic of Sakha (Yakutia) placed the full amount of its domestic government loan

The Republic of Sakha (Yakutia) completed placement of its fixed-coupon government loan (registration #
RU25005RSY) on October 8, 2004. The issue was sold in full amount.

The issue terms are listed below:
                                                          28                              prepared by Igor Sazonov
                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                            11, 2004

Issue size: RUR2,000 mln
Tenor: 3 years
Coupon: quarterly
Coupon rates: 1-2 coupons – 11%; 3-6 coupons – 10% p.a.; 7-10 coupons – 9% p.a.; 11-12 coupons – 8% p.a.;
Maturity date: April 21, 2007.

26.04.2004 - Cbonds
Yakutia placed the first RUR800 mln tranche of its domestic bonds on MICEX at 10.5% – issue manager
Rosbank

Yakutia placed the first RUR800 mln tranche of its bonds on MICEX at 10.5% – issue manager Rosbank. The bonds
were placed at a cut-off price of 98.63% of par.The bond issue totals RUR2 bln, and the issuer decided to place the
paper in several tranches. The timing of the second tranche has yet to be determined.

Corporate bond market
(only issues with outstanding volume more than RUR1bln (USD 30 mln) are included; see also table #9 for the
coverage)

Looking at the month results one could say with a great deal of certainty that the
consequences of confidence crisis in the banking system that happened in Russia this
summer are overcome, at least for the corporate debt market: 8 issuers have come to the
market with the bonds totaling RUR15.65 bln.

Late October Russian Central Bank FX policy has even boosted up the market optimistic
sentiments encouraged by Moody’s decision to change Russia’s sovereign rating outlook to
positive made on Oct 6th. The bank allowed the rouble to firm its position against the
dollar, further increasing the attractiveness of rouble-denominated assets. The market
performance in November will show whether we’ll have a start of a new trend like it was
already 1Q 2004 or just a kind of blip on the market.

The main event on the market was definitely Gazprom series 5 domestic bond placement
held on Oct 12th. The gaz giant sold a RUR5 bln three-year bond with an annual yield of
7.58 percent (7.72% p.a. YTM) -- the company's cheapest domestic borrowing for the
moment. The placement results are seen as quite successful. The paper was sold with
almost zero premium to the secondary market (the spread just after the placement was
about 10 bps below the comparable Moscow City domestic bonds and about 100 bp over
the government ones).

The bonds carry six half-yr coupons with the remaining coupons matching the first one.
The issue was placed at par.

Demand on the auction was a bit above RUR9 bln level with 120 orders made. The bulk of
the issue went to domestic players, however, international investors seemed to be targeted
at the higher yields than the Russian ones. Whereas foreigners made up about 40 percent
of the issue book orders they were sold only 15 percent of the issue, according to the data of
Renaissance Capital, one of the arrangers. 73 bids were totally met.

10 banks and investment companies formed the placement syndicate. Renaissance Capital,
Rosbank manage all three series; IK Horizont, OFG act as co-managers; Federalnaya
Fondovaya Korporatsia is the financial consultant; Bank of Moscow, International Moscow
Bank, Web-Invest Bank, Promstroybank, MDM-Bank, Khanty-Mansy Bank are the issue
underwriters. FFK acted as a financial advisor.

As far the domestic debt market Gazprom’s two remaining bonded loans (RUR5 bln each)
registered this Sept. will be placed next year, as the company informed late October.
                                                         29                              prepared by Igor Sazonov
                                                                                                   is@cbonds.info
Russian fixed income monthly                                                                          11, 2004


12.10.2004 - Cbonds
The first coupon rate for Gazprom’s domestic bonds at 7.58% p.a.

The coupon rate on Gazprom’s bond issue has been set at 7.58% p.a., the market participant said.The A5-series
issue worth RUR5 bln was 2 times oversubscribed. The auction saw 120 bids worth RUR9 bln. The bonds have been
fully placed on MICEX today.

The issue contains 5 mln bonds, RUR1,000 par each; duration - 1,092 days; 6 coupons, each coupon period is 182
days long. The 2-6 coupon rates equal the 1st one.

Russia’s Federal Financial Markets Service registered three 5 bln rbl bonded loans on August 19, 2004. Apart from
A5s, A4s bonds (1,820 day duration, registered number: 4-04- 00028-A) and A6s bonds (1,456 day duration (4-06-
00028-Q) were registered.

The debut bonded loan of Uralvagonzavod-Finance (SPV of Uralvagonzavod) was placed
on MICEX October 5, 2004. The bonds mature in 4 years. The issue worth RUR2 bln was
booked in amount of RUR2.11 bln with 60 deals closed during the auction. The semiannual
rate of 1-4 coupons was set at 13.36% p.a., implying the effective yield at 13.8% p.a. The
issuer will set the rate of the remaining coupons.

Earlier the representative of Russian Funds, the issue arranger, forecasted the coupon rate
at 13-13.5% p.a., so the issuer had to give additional premium to market above guideline
for the investors. Even given this according to the deal disclosure data about 80% of the
issue size went to issue arrangers.

The bond has 2 put options after 1 and 2 years floatation respectively.

Russian Funds acted as the issue arranger, with KB Neftianoy, Transcreditbank and
Gazprombank as co-arrangers. The International Moscow Bank was the bonds
underwriter, and Promsviazbank – co-underwriter.

The funds will go to re-finance current loans and to finance the company production
facilities renewal program.

06.10.2004 - Cbonds
The bonded loan of Uralvagonzavod-Finance was fully placed on MICEX October 5, 2004

The debut bonded loan of Uralvagonzavod-Finance was successfully placed on MICEX October 5, 2004. The
coupon rate was set at 13.36% p.a., effective yield – at 13.8% p.a. The bonds are due in 4 years.

On the same date SMARTS 3rd series domestic bonds worth RUR1 bln were placed. The
issue has 5-year tenor and carry semiannual coupon. The bond implies 4 buy back offers at
par during the flotation period (the first one could be executed on Oct 5th, 2005). The
coupon rate for 1st and second coupon periods was set at 15.1% p.a. level. (15.67% p.a. to
yield to 1-year put option). The 3-4 coupons will be equal to the 1st one minus 100 bps, the
5-10 coupons will be set by the issuer. Previously the issuer’s representatives forecasted the
first two coupon rates in the range of 14-15% p.a.

The book over the auction amounted to RUR1.041 bln with the orders worth RUR967.26
bln. The rest of the issue amount was sold through negotiation deals. The total of 98 orders
were met.




                                                        30                             prepared by Igor Sazonov
                                                                                                 is@cbonds.info
Russian fixed income monthly                                                                          11, 2004

The issue lead managers were Vneshtorgbank and MDM Bank; Aton co-led the deal; the
issue co-underwriters were Capital IG, Khanty-Mansiysk Bank, Transportnij bank and
IBG NIKoil. Ellipse Bank is the issue financial consultant. Pensa GSM guarantees the issue
05.10.2004 - Cbonds
Coupon rate for 3rd series SMARTS issue was set at 15.1% at the auction

The coupon rate for the first year in circulation of the 3-series bonded loan of SMART telecom systems was set at
15.10% p.a. at the auction held on MICEX. It corresponds to yield on 2-year buy-back option of 15.67%, as
informed by one of the market participants.

The issuer will use the placement proceeds for development of its regional network and
consolidation of the company’s assets.

At present there are two outstanding issues of SMARTS on the market worth RUR275 mln
and RUR500 mln respectively. The first bond is due in November of 2005, the second – in
June of 2007.

UTK (South Telecom Company) was the first issuer that benefit from Moody’s rating
action early October. On October 6, 2004 the telecom operator sold its 3-series domestic
bond issue. The 3-series issue size amounts to RUR3.5 bln. The bonds are due in 5 years,
carry a semiannual coupon and a buy-back option in 1.5 and 3 years. The first semiannual
coupon rate UTK bonds was set at 12.3% p.a. (yield to 1.5-year buy-back option at 12.68%
p.a.). The issuer will set the rest of coupons.

The issue was rated ‘ruBBB-‘ by S&P.

Investor appetite for the issue was high, with 137 bids worth total of RUR4,454,711 mln
and yield range of 11% - 13% p.a. The book size was RUR500 mln over the nominal issue
size. The majority of bids suggested coupon rate of up to 12.4% p.a. 110 bids worth
RUR3.396 bln were met. The remaining part of the issue was place through negotiated
deals.

Rosbank led and underwrote the deal with Promsvyazbank acting as a co-lead. Aton, Bank
Zenit, Web-invest Bank, Region Group, IMB, Industry and Construction Bank, ING Bank,
Gazprombank, Moscommertsbank and IC RUSS-INVEST were the issue co-underwriters.

The issue is guaranteed by UTK Finance. FFC is the issue financial consultant.
07.10.2004 - Cbonds
UTK bonds yield was set at 12.3% p.a. which corresponds to effective yield on 1.5-year buy-back option of
12.68% p.a.

On October 6, 2004 UTK (South Telecom Company) launched its 3-series bond issue on MICEX, as reported by
Rosbank. UTK bonds yield was set at 12.3% p.a., which corresponds to effective yield on 1.5-year buy-back option
of 12.68% p.a.

The debut bond issue of Home Credit and Finance Bank (HCF Bank) was auctioned on
MICEX on October 19, 2004. The first two coupon rates were set by the issuer at 11.25%
p.a. The book of the debut ruble issue of Home Credit and Finance Bank amounted to
RUR1.8bln with 39 bids made, the issue arrangers reported. The total amount of the issue
was successfully placed at the auction.

The bonds have a 3-year tenor and semi-annual coupons. 3-6 coupon rates are to be set by
the issuer. According to the issuer’s decision, the issue prospectus provides for a buy-back
                                                        31                             prepared by Igor Sazonov
                                                                                                 is@cbonds.info
Russian fixed income monthly                                                                         11, 2004

option at par in one year – on the date of the second coupon redemption – October 18,
2005.

Raiffeisenbank Austria managed the deal. The following companies were mandated as co-
managers: Vneshtorgbank, Gazprombank, MDM Bank, Petrocommetsbank, Dresdner
Bank, ING Bank (Eurasia), International Moscow Bank, Industrial Construction Bank of
St. Petersburg, Standard Bank. Federal Stock Corporation acted as the financial
consultant.

Home Credit & Finance Bank was set up in Feb. of 2002 on the basis of Technopolis bank
(established in 1990). The bank is primarily focused on consumer loans market where
Russian Standard Bank has a dominating position. But the fact that Czech Home Credit
Finance a.s. (Ceska pojistovna a.s. (Moody's – Uaa3, S&P – BBB-) holds 99.8% of the bank
stock that should improve the bond performance on the secondary market.
19.10.2004 - Cbonds
The 1st coupon rate of Home Credit and Finance Bank’s domestic bond at 11.25% p.a.

The 1st coupon rate of Houm Credit and Finance Bank’s issue was set at 11.25% p.a., according to the issuer. The
3-year bonded loan worth USD1.5bln is auctioned on MICEX at par of RUR1,000.

On Oct 26th Baltika Brewery debut issue worth RUR1 bln technical placement was held on
MICEX. The bonds implies technical buy-back on 28th day from the placement start. 1st
coupon for the period prior to the buy-back is set at 4% p.a. After the placement report
registration the issuer will set the rest of coupons and announce the date of the placement
price auction.

Thus, the bonds will be offered to investors after registration of the report on the
placement results. This will allow minimizing interest risks due to the absence of secondary
circulation in the period between the placement and registration of the issue results.

The company will hold meetings with investors in St. Petersburg and Moscow, at which
they will be able to get acquainted with the company’s management and get full
information on Baltika’s marketing policy and development strategy.

Raiffeisenbank Austria acts as the issue arranger, underwriter and paying agent.

This bonded loan is the first issue of Baltika and an important step in building the
company’s public credit history. The proceeds will be used for diversification of financing
sources of Baltika’s investment activities.
27.10.2004 - Cbonds
Baltika Brewery placed its debut domestic bond issue

JSC Baltika Brewery placed its debut bond issue worth RUR1 bln on October 26, 2004, as informed by the
company. The three-year bonds wee placed by private offering. Raiffeisenbank Austria arranged the placement.

On Oct 26th Euroset Trading House placed its 1 series bonded loan worth RUR1 bln with a
1.5-year maturity. The issue implies buy-back option on holders’ demand – on December
29, 2004, and 9 months after the placement date.

Investors showed healthy appetite at the auction, as 56 bids were submitted in total amount
of RUR722.020 mln, with rates ranging between 9% and 17% p.a. The majority of bids
offered rates around 16.4% p.a. 1-3 coupon rates were set by the issuer at 16.33% p.a.,

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                                                                                                is@cbonds.info
Russian fixed income monthly                                                                       11, 2004

which corresponds to yield to maturity of 17% p.a (17.47% p.a. to 1st offer). The bids were
met in total amount of RUR721.945 mln, or 70% of the issue. The rest of the issue was
placed in negotiated deals during the first placement day. Totally 57 deals were made with
the leads taken about 57% of the issue.

Regarding the yield of the issue arrangers set during the auction and short period before
the 1st put, it will be really a challenge for them to keep the investors from selling the paper
on first offer.
27.10.2004 - Cbonds
Euroset’s domestic bond auction: RUR721.945 mln worth of bids were (70% of the issue) met

Euroset Trading House placed its bond issue on MICEX on October 26, 2004; the 1-3 coupon rates were set at the
tender.

Issues to come

GKO-OFZ

The Russian Finance Ministry plans to launch government savings bonds worth up to
RUR30 bln by the end of 2004. This information was provided by Andrey Voronzov, the
deputy Director of the financial policy department of the Finance Ministry at an interactive
investment conference.

He reminded that government savings bonds (GSO) are a special investment instrument
for pension funds. GSO is a non-market security. According to the Ministry’s estimate, the
annual size of proceeds from GSO issues is planned at RUR50-60 bln.

Municipals

The Moscow City does not rule out that favorable situation in the domestic debt market
may allow the city of Moscow to replace part of its planned bank credits totaling RUB 7.4
bn with ruble bonds. “We still have about RUR7.4bln to raise this year. So far we have planned
to do it by means of bank credits, but…given the current conditions, we might also place bonds
on domestic market”, - said Sergey Pakhomov, head of the State Debt Committee of the City
of Moscow.

Pakhomov also informed that the City of Moscow also considers placing bonds with tenors
of 2 to 10 years, and possibly 12 and 15 years in 2005. But the final decision on this matter
will be made after demand analysis in the first quarter of the next year.

The government of the City of Moscow plans to decrease the total volume of borrowings to
RUB 39.4 bn in 2005, of which RUB 29.5 bn will be in bonds.

The City debt is estimated at RUR107 bln by close of this year, 29% to the annual revenues
of the city. The domestic debt amounts to RUR71 bln, foreign debt - USD985 mln, or
28.9% of overall debt structure. The city will allocate RUR28.8 bln, or 3% of budget
spending, to settle the debt in 2005. RUR10.71 bln, or 8% to budget spending, will go to
service the debt.
14.10.2004 - Cbonds
City of Moscow may return to the ruble bond market till the end of 2004




                                                        33                           prepared by Igor Sazonov
                                                                                               is@cbonds.info
Russian fixed income monthly                                                                             11, 2004

Favorable conditions on the ruble loan market and high investor demand for Moscow bonds may allow the City
government to make a primary placement by the end of 2004, and offer 12-year bonds in 2005, announced a City
government representative at a press-conference.

13.10.2004 - AK&M
Moscow City intends to raise RUR7.4 bln via bank loans before end this year, S. Pakhomov said.

Moscow intends to raise 7.4 bln rbl via bank loans, Sergei Pakhomov, chairman of Moscow state borrowing
committee, told the reporters.The city has yet no intentions to attract the funds via releasing bonds. However, there
is possibility that bonded loan would be placed on domestic market.Overall turnover of the city's borrowing
program was 55 bln rbl in 2004.

Corporates
(only issues with outstanding volume more than RUR1bln (USD 30 mln) are included; see table #9 for the complete
coverage)

Russian Railways once again confirmed its plan to launch bonds worth RUR12bln. The
issue target sounded very general though: infrastructure development. The market
participants believe that in spite of the company’s high investment rating, it won’t be able
to place the issue at high yield. Russian Railways may start placing its bonded loan in mid-
December, said the Finance Vice-President Fedor Andreyev.

“We plan to submit the documentation to the Federal Service on Financial Markets in the
end of this week – beginning of the next. It usually takes from three weeks to a month to
process. And two weeks should pass after the registration. It appears that (the placement
will commence) in mid-December”, - he said.

Web-Invest Bank and JP Morgan Bank were mandated to manage the debut issue worth
RUR4bln.

According to Andreyev, the placement terms do not provide a buy-back option.

This year Russian Railways have postponed bond release several times due to unfavorable
market condtions. The company public relations department said, the exact dates will be
announced upon registration of the issue. The company could not even provide information
on whether the paperwork had been submitted for registration yet. However, investment
companies’ analysts say that the company still might have enough time to place the issue
this year.

It is known, that the bonds will be issued in three tranches in total amount of RUR12bln.
Each tranche (01, 02, 03) will consist of 4 mln bonds worth RUR1,000 each. The first series
will be redeemed one year after the placement, the second one – in three years, and the
third one – in five years, with no buy-back option.

12.10.2004 - Cbonds
Russian Railways to launch 1-, 3- and 5-year domestic bonds worth RUR12 bln

On Monday the BoD of Russian Railways adopted the decision to place three kinds of loans worth RYR12 bln, said
the company’s representative.Russian Railways intends to place three bond series worth RUR4 bln each. They will
have maturities of one, three and five years.

14.10.2004 - Reuters
Russian Railways pick JP Morgan for rouble bond

Russian state railways have selected investment bank JP Morgan to lead manage its 12 billion rouble ($412.2
million) domestic bond saying on Thursday that it counted on active foreign participation. The company, which

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                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                          11, 2004

controls the world's second largest railway system, said in a statement the Russian bank VEB-Invest would help it
place the bond with local investors, but it also hoped that the issue would be popular abroad.

Russia's third largest mobile phone services provider, MegaFon, is also trying to benefit
from the current favourable situation on the domestic debt market: the company seems to
have shelved the plans of international debt market issuance and will try to borrow
domestically.
29.10.2004 - Reuters
Russia's MegaFon plans 6.8 bln rouble bonds

Russia's third largest mobile phone services provider, MegaFon, plans to issue three tranches of domestic bonds
worth a total of 6.8 billion roubles ($236 million), the company announced on Friday. The exact maturities would
depend on market conditions, spokesman Andrei Klimov said. The company gave no details about when the bonds
would be issued. The proceeds will be used to finance investment projects.

The World Bank’s Director for Russia Kristalina Georgiyeva said that the bank plans to
launch ruble bonds on Russian market. The market participants took the news calmly,
since they do not expect the bonds to appear on the Russian market any time soon. After
all, the other major creditor of the Russian economy – the European Bank for
Reconstruction and Development (EBRD) – intended to place such bonds as well, but
wasn’t able to do it.

As announced yesterday by the World Bank’s Director for Russia Kristalina Georgiyeva,
the bank plans to place ruble bonds on the Russian financial market. The bank needs issues
of this kind in order to be able to provide national currency credits to Russian borrowers.
According to Mrs. Georgiyeva, the possibility of ruble bond issuance had been discussed
with the Bank of Russia’s CEO Sergey Ignatyev at the fall session of the IMF and WB in
Washington. Mr. Ignatyev took the World Bank’s idea very positively.

The WB is not the first international financial institution to plan a ruble bond issue. EBRD
has been trying to tap the market for years. Every year they announce their intent to issue
ruble bonds having the same target in mind, i.e. providing loans to Russian companies.
However, every time some obstacles turn up to cause delays in issuance. In April last year
the government finally adopted a resolution according to which EBRD was included into
the list of international financial institution allowed to issue and place bonds in accordance
with the law on “securities market”. At present there are no formal obstructions to the
issue. On the other hand, market conditions may still interfere.

04.10.2004 - Cbonds
The World Bank may issue ruble bonds on Russian market

The World Bank may issue ruble bonds on Russian market. This information was provided to reporters by the World
Bank’s Director for Russia Kristalina Georgiyeva on Sunday.“We have discussed this question with the Bank of
Russia’s CEO Mr. Ignatyev as well, and his reaction to this initiative was positive,” – she said.

Mrs. Georgiyeva noted, that such bonds might be launched as soon as 2005. Although, the issue size and specific
terms of placement will be determined by the World Bank’s treasury.The World Bank’s Director for Russia said,
that these funds will be used in Russia domestically and virtually return into the country’s economy.

18.10.2004 - Cbonds
The EBRD to launch bonds on the Russian market

In the beginning of 2005 the Russian market will see ruble bonds of the highest security level. The European bank
for Reconstruction and development will be the borrower. The information on the planned issue was provided by the
head of EBRD’s Jean Lemierre. Mr. Lemierre did not specify the loan size, but, according to sources, EBRD intends
to borrow around RYR3bln on the Russian market.

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                                                                                                 is@cbonds.info
Russian fixed income monthly                                                                         11, 2004


The proceeds will be used for loans to Russian regions which are incapable of borrowing foreign currency funds.
The new instruments are expected to yield around 6-7% p.a. The bank will lend to the regions at the market rate,
and proceeds will re-invested in Russia. The World Bank is working on a similar project.




                                                        36                            prepared by Igor Sazonov
                                                                                                is@cbonds.info
Russian fixed income monthly                                                                            11, 2004

Ratings
Moody's Investors Service on Oct 6th assigned a positive outlook on Russia's foreign and
local currency debt ratings due to the country's strong macroeconomic fundamentals.
06.10.2004 - Cbonds
Moody’s changes outlook on Russia to positive as macroeconomy strengthens

Moody's Investors Service today assigned a "positive outlook" to Russia's foreign and local currency debt ratings.
This outlook change follows several years during which the Russian Federation has experienced exceptionally
strong macroeconomic fundamentals alongside prudent fiscal and monetary policies and outstanding growth of both
official foreign currency reserves and foreign currency reserves in a new "stabilization fund." Strong current
account and budgetary surpluses have led to sharp improvements in all liquidity ratios and a declining debt and
debt servicing burden. Ample revenues have allowed prepayment of external debts, while domestic debt and debt
servicing payments are very small and do not represent a significant burden on government revenues. At the same
time, the annual rate of inflation continues its downward trend and will reach single digits during 2005.
Government regulatory control of the rate of price rises for utilities provides a lever for ameliorating upward
pressure on prices coming from large foreign currency inflows associated with the current account surplus. Moody's
said that current centralizing trends in the political sphere do not appear to lead to weakening of the country's
fundamental creditworthiness. Moody's said it will continue to assess the sustainability of recent developments. If
present trends continue, further upward pressure on the ratings will result.

The outlook change affects the following ratings of the Russian Federation: the medium-to-long term foreign
currency country ceiling for bonds (currently rated Baa3), the medium-to-long term rating for all outstanding bonds
of the government of the Russian Federation (Baa3), the foreign currency ceiling for bank deposits (Ba1), the
medium-to-long term rating for local currency bonds of the Russian Federation (Baa3), the ratings for Ministry of
Finance tranches (tranche V -- "Soviet era debt" -- is rated Ba2, while tranches VI and VII -- "Russian era debt" --
are rated Ba1) and the short-term foreign currency country ceilings (currently Not Prime).

Essential ratings actions on Russia’s issuers: Oct 2004

Issuer                                                   Rating Change                  National Scale Rating
                                                                                        Change
                                                         from           to              from       to
Russian Federation (Moody’s)
• foreign and local currency debt ratings                Baa3
outlook                                                  stable         positive
Municipal
City of St. Petersburg (S&P)
• long-term issuer credit ratings                        BB             BB
outlook-stable
Yamal-Nenets Autonomous Okrug (S&P)
• foreign currency long-term issuer credit rating        B              B+              ruA          ruA+
outlook-stable
Leningrad Oblast (S&P)
• long-term foreign currency issuer credit rating and    assigned       B+              assigned     ruA+
outlook-stable
Corporate
LUKOIL (Moody's)
• senior implied rating                                  Ba2            affirmed
• issuer rating                                          Ba3            affirmed
                                                         stable         positive
Transneft (Moody's)                                                     outlook
• senior implied rating                                  Baa3           amended
• issuer rating                                          Ba1            from stable
                                                                        to positive
Russian Railways (Moody's)                                              outlook
• long-term unsecured issuer rating                      Baa3           amended
                                                                        from stable
                                                                        to positive


                                                          37                              prepared by Igor Sazonov
                                                                                                    is@cbonds.info
Russian fixed income monthly                                                                    11, 2004

Corporate
Issuer                                                 Rating Change              National Scale Rating
                                                                                  Change
                                                       from        to             from       to
Gazprombank (Moody's)                                  Ba2         on    review
• long-term foreign currency deposit rating                        for possible
                                                                   upgrade
Sibneft (S&P)                                          B           removed
outlook-developing                                                 from
                                                                   CreditWatch
Sberbank (Moody's)
• long-term foreign currency deposit rating            Ba1
outlook                                                stable      positive
Vnesheconombank (Moody's)
• long-term foreign currency deposit rating            Ba1
outlook                                                stable      positive
Vneshtorgbank (Moody's)
• long-term foreign currency deposit rating            Ba1
outlook                                                stable      positive
MMK (Fitch)
• senior unsecured foreign currency rating             BB-         affirmed
outlook-stable
International Moscow Bank's ("IMB") (Fitch)
• individual rating                                    D           C/D
Alfa-Bank (Fitch)                                                                 assigned   A(rus)
Credit Bank of Moscow (Fitch)                                                     assigned   BB(rus)
Orgresbank (Fitch)                                                                assigned   BB+ (rus)
Rosbank (Fitch)                                                                   assigned   BBB(rus)
Severstal (Fitch)                                                                 assigned   A(rus)
Uralsvyazinform                                                                   assigned   A+(rus)
Alrosa (Moody’s)
• senior implied rating                                affirmed    B1
• senior unsecured issuer rating                       B3          B2
outlook-stable
B.I.N. Bank (S&P)
• long-term rating                                     assigned    CCC+           assigned   ruBB
• short-term counterparty credit and certificates of   assigned    C
deposit rating
outlook-stable
Yukos (Moody's)
• senior implied rating                                B1          B2
• issuer rating                                        B2          B3
on review for downgrade




                                                       38                          prepared by Igor Sazonov
                                                                                             is@cbonds.info
Russian fixed income monthly                                                                      11, 2004

Issues
Issuer                                               Rating Change                  National Scale Rating
                                                                                    Change
                                                     from            to             from       to
Tomsk Oblast proposed RUR600mln domestic bond
issue (S&P)
• senior unsecured debt rating                                                      assigned   ruA
Alrosa Finance S.A. proposed USD400-500 mln          assigned        B2
notes (Moody’s)
Alrosa Finance S.A. USD 500 mln in 8.125% notes      B3              B2
(Moody’s)
Alrosa Finance S.A. USD 500 mln in 8.125% notes      assigned        B
(S&P)
• long-term rating
Alfa MTN Issuance Limited’s USD190 mln 8%
medium term notes due April 2006 (Fitch)
• long-term rating                                   assigned        B+
Promsvyaz Finance S.A.’s USD100 mln 10.25%
limited recourse LPNs due 2006 (Fitch)               assigned        B
• long-term rating
Russia International Card Finance S.A.’s USD150
mln structured fixed-rate notes due 2010 (Rosbank)   assigned        B+
(Fitch)
VTB Capital S.A. Series 4 USD issue of MT LPNs
(Moody's)                                            assigned        (P)Baa3
Kuznetski Capital S.A.’s (Bank of Moscow)
USD250 mln LPN bonds due 2009 (Fitch)
• long-term rating                                   assigned        BB
Promsvyaz Finance S.A.’s upcoming LPNs issue
(Fitch)
• long-term rating                                   assigned        B
Southern Telecommunications Co. proposed
RUR3.5 bln senior unsecured bond due 2009                                           assigned   ruBBB-
(S&P)
Russian Standard Bank LPNs upcoming issue            assigned        Ba3
(Moody's)
EMTN program of Gazinvest Finance                    Ba2             on    review
B.V.(Gazprombank) Moody's                                            for possible
                                                                     upgrade
City of Moscow LPNs due 2011 (Fitch)
• long-term foreign currency rating                  assigned        BB+
Promsvyaz Finance S.A. proposed LPNs issue
(S&P)
• senior unsecured debt rating                       assigned        B-
EvrazSecurities S. A. USD150 mln senior five-year    assigned        B
notes (Fitch)
outlook-stable
VTB Capital S.A's USD450 mln LPNs due 2011
(Fitch)
• long-term rating                                   assigned        BB+
MTNs worth USD1.05 bln issued by GazInvest           Ba2             on    review
Luxembourg S.A. (Moody’s)                                            for possible
                                                                     upgrade
VimpelCom proposed USD300 million LPNs               assigned        (P)B1
(Moody's)
Russia International Card Finance S.A.(Rosbank)
USD 150 million Class 2004 % Structured
Receivables Notes due 2010 (Moody's)                 assigned        (P)Ba3
VimpelCom proposed USD300 million LPNs
(S&P)
• senior unsecured debt rating                       assigned        BB-

                                                          39                         prepared by Igor Sazonov
                                                                                               is@cbonds.info
Russian fixed income monthly                                                                                11, 2004

Municipals

01.10.2004 - Cbonds
S&P Raises Rating on St. Petersburg to 'BB+'

On Oct. 1, 2004, Standard & Poor's Ratings Services raised its long-term issuer credit ratings on the Russian city of
St. Petersburg to 'BB+' from 'BB'. The outlook is stable.

The upgrade is based on stabilization of the local political environment and confirmation of the new management's
prudent investment policies, sound financial performance, and low debt. The city's debt is not expected to exceed
30% in the next three to four years. Its budgetary performance will remain stable with small deficits after capital
expenditure of 3%-5%.

The rating on St. Petersburg continues to be constrained by low revenue predictability and flexibility, volatile
industry, and significant infrastructure financing needs.

The federal government controls the rate, type, and share of taxes, and the equalization and transfer mechanisms
are constantly changing. Budgetary and tax reforms are ongoing, with potentially negative implications for the city.
The intergovernmental relations between the central government and the city, however, have improved compared
with earlier years.

After being in power for more than a year, the new St. Petersburg government has maintained a prudent debt policy
and continued the road of reforms. Its sound debt management system is perhaps one of the best in Central and
Eastern Europe.

St. Petersburg has demonstrated a low debt burden, with direct debt at less than 20% of operating revenues in 2003,
compared with 42% in 1998. The overall debt burden is expected to remain within 20%-30% of revenues in 2005-
2006. The debt structure has improved, with lower exposure to foreign currency exchange risks.

The city's revenues are growing. Combined with increasing fiscal discipline, this resulted in good budgetary
performance, with small surpluses on average after capital expenditure for the past four years. The city had a
healthy operating surplus and a small 1% deficit after capital expenditure in 2003. Financial performance is
expected to be slightly worse in the next few years, as St. Petersburg's infrastructure requires significant investment.
Some financial pressure may also come from the restructured liabilities to OAO Lenenergo and planned increases
in social spending.

Industrial volatility continues to be a concern. Industrial output growth is estimated at 5.8% in 2003, after 31.4%
growth in 2002 and stagnation in 2001. Given that industry still accounts for 28% of the city's GDP, the continuing
volatility of local heavy industry production, which includes shipbuilding, machinery, and metallurgy, leads to
notable fluctuations in GDP and taxes. Some large enterprises in the city remain in difficult financial circumstances
and are continuing to produce significantly below capacity.

The city's developing service sector and continued GDP growth, however, are positive rating factors. Future
economic growth is expected, with continued diversification into services.
Outlook
The outlook is stable. Standard & Poor's expects St. Petersburg's to continue to balance the need to improve
infrastructure with sound budgetary indicators and moderate debt

12.10.2004 - Cbonds
S&P Rates Tomsk Oblast Proposed Sr Unsecd Bond 'ruA'

Standard & Poor's Ratings Services said today it assigned its 'ruA' Russia national scale senior unsecured debt
rating to the proposed Russian ruble (RUR) 600 million ($20.5 million), step-down, fixed-coupon domestic bonds to
be issued by the Tomsk Oblast (Russia national scale rating 'ruA').

The issue will be placed on Oct. 13, 2004, and will have six semiannual coupon payments, with the bonds maturing
in 2007. The bonds will be issued to refinance existing debt and to fund capital expenditures. The rating on the
bonds is the same as the national scale rating on Tomsk.

"The rating on the Oblast is constrained by its high dependence on its largest taxpayer, oil company TomskNeft,
affected by the OAO NK YUKOS (CC/Watch Neg/--) deal," said Standard & Poor's credit analyst Boris Kopeykin.



                                                            40                               prepared by Igor Sazonov
                                                                                                       is@cbonds.info
Russian fixed income monthly                                                                            11, 2004

For more information on the Yukos deal, see the Standard & Poor's commentary "Ratings on Four Russian Regions
As Yet Unaffected by Yukos Tax Freeze," published on Sept. 15, 2004, on RatingsDirect, Standard & Poor's Web-
based credit analysis system.

Diversification prospects are limited by the Oblast's remote location. The rating is also constrained by Tomsk's
comparatively high debt service, volatile financial performance in the Russian context, and low revenue flexibility
and predictability. Tax-supported debt is estimated at 25% of total revenues at year-end 2004. Debt maturities will
remain relatively short.

"Factors supporting the rating include continuous economic growth in the region--at almost 9% on average
between 1999 and 2003--competent management, and a good credit history," added Mr. Kopeykin.

21.10.2004 - Cbonds
S&P Raises Yamal-Nenets Autonomous Okrug FC Rtg to B+

Standard & Poor's Rating Services said today it raised its foreign currency long-term issuer credit rating on the
Russian Yamal-Nenets Autonomous Okrug to 'B+' from 'B'. The outlook is stable. At the same time, Standard &
Poor's raised the Russia national scale issuer and senior unsecured debt ratings on the Okrug to 'ruA+' from 'ruA'.

"The upgrade on Yamal-Nenets, located in northwest Siberia in The Russian Federation (foreign currency
BB+/Stable/B; local currency BBB-/Stable/A-3; Russia national scale ruAA+), reflects the improving predictability
in the medium term of the Okrug's budget performance," said Standard & Poor's credit analyst Felix Ejgel.

This follows the signing of a five-year agreement between Yamal-Nenets and Tyumen Oblast on the division of
revenues and expenditures. The rating action is also based on continued improvement in management
sophistication, high wealth levels, and the Okrug's low debt burden.

Although the risk of further significant redistribution of the Okrug's revenues in favor of Tyumen Oblast and the
Russian federal government has diminished in the near term, it is still tangible in the longer term.

"The ratings are further constrained by the Yamal-Nenets' high dependence on the natural gas- and oil-extraction
sectors, particularly on the company OAO Gazprom (BB-/Developing/--), and the high seasonality of the Okrug's
liquidity position," said Mr. Ejgel.

"Transparency and management practices are still developing, although some improvement has been noted. The
liquidity position, meanwhile, has been improving despite the extreme seasonality of expenditures. Nevertheless,
Yamal-Nenets enjoys a wealthy economy within the Russian context, with the highest gross regional product per
capita in Russia of more than $20,000," he added.

Standard & Poor's expects that the Okrug's conservative budgetary and debt management policy will mitigate
potential volatility of revenues caused by the high dependence of the Okrug's economy on the gas- and oil-extraction
sector, and the risk of further redistribution of revenues in favor of the Tyumen Oblast and The Russian Federation.

26.10.2004 - Cbonds
S&P Rts Leningrad Oblast 'B+', 'ruA+'; Otlk Stable

Standard & Poor's Rating Services said today it assigned its 'B+' long-term foreign currency issuer credit rating
and its 'ruA+' Russia national scale rating to the Leningrad Oblast, located in the northwest of The Russian
Federation (foreign currency BB+/Stable/B; local currency BBB-/Stable/A-3). The outlook is stable.

"The ratings on Leningrad reflect the region's deteriorating financial performance, poor debt history, and low
revenue flexibility due to federal controls. The ratings are strengthened, however, by the Oblast's continued fast
economic expansion, strategic location, and moderate debt," said Standard & Poor's credit analyst Boris Kopeykin.

Leningrad's economy is rapidly developing, although economic concentration in tobacco and oil-processing
industries is still noticeable. Average annual growth was reported at 12.2% in 1999-2003. In addition, high gross
regional product growth is expected to continue, with at least 8% expected in 2004.

"We expect the Oblast's rapidly growing economy to help offset both operating and capital-expenditure pressures.
Furthermore, a prudent debt policy should keep deficits after capital expenditure within single digits over the next
few years," added Mr. Kopeykin.



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Corporates

01.10.2004 - Cbonds
Moody's Lukoil’s rating outlook to positive from stable

Moody's Investors Service yesterday affirmed the Ba2 senior implied rating and Ba3 issuer rating of Russian oil
company OAO LUKOIL, and changed the rating outlook to positive from stable, following yesterday's
announcement that ConocoPhillips (rated A3/P-2/Positive) will purchase the Russian government's 7.6% stake, and
plans to acquire an additional 2.4% stake by the end of the year.

Furthermore, a shareholder agreement between the two parties gives ConocoPhillips the right to acquire up to 20%
of LUKOIL over time, and limits its ability to sell LUKOIL shares for a period of four years.

Moody's decision to change the outlook on LUKOIL's ratings to positive reflects its expectation that ConocoPhillips'
presence as a strategic minority equity investor, which will appoint one member to the LUKOIL management board,
is likely to bring additional technical and corporate governance expertise to the company, as well as increased
financial strength to develop certain key projects.

This is evidenced by an amendment to LUKOIL's charter, which will require unanimous Board consent on certain
issues. Further agreements include the creation of a joint venture to develop reserves in the Timan-Pechora region,
in which ConocoPhillips will be taking a 30% stake, although the project will be governed on an equal basis.
ConocoPhillips has agreed to make a USD 370 million upfront payment, in addition to contributing 30% of working
capital and 30% of capital expenditure going forward. The parties also announced that they will jointly seek the
right to develop LUKOIL's West Qurna oil field in Iraq.

Moody's added that LUKOIL's positive outlook also reflects the company's continuing efforts to improve its
fundamental performance, including the implementation of the group's long-term strategy, which - if carried out
successfully - should ensure greater efficiency and financial resilience going forward. The company is benefiting
from steady production growth and stable lifting costs, as it seeks to shut underperforming wells and bring on
stream new fields. The high oil price, which has bolstered cash flows and raised coverage ratios and other debt
protection measures, is unlikely to be sustainable.

LUKOIL has reduced its leverage and reinforced its intention to maintain debt-to-equity below 30%, which is
supportive of its ratings. At the same time, however, Moody's notes that LUKOIL's capital expenditure programme
remains challenging, although the company anticipates a large part of future investment needs to be covered from
internally-generated funds or from the proceeds of disposals from its restructuring programme. Moreover, despite
the operational improvements being made by the company, it continues to lag its more efficient peers in terms of
costs and per well production, which will leave it more exposed in a lower oil price environment, particularly as
transportation costs and the overall fiscal burden for the sector continue to rise. Moody's believes that the
involvement of ConocoPhillips going forward could significantly enhance LUKOIL's efficiency and productivity
over time, which could ultimately lead to an upgrade of its ratings.

However, the agency added that it did not expect any general financial support to LUKOIL from ConocoPhillips
beyond that outlined in yesterday's announcement.

OAO LUKOIL, headquartered in Moscow, Russia, is the country's largest vertically integrated oil company in terms
of reserves, and one of the largest oil companies in the world. In 2003, the group produced 1.63 million barrels of
oil per day, refined 43.5 million tonnes and attained sales revenues of around USD 22.1 billion.

01.10.2004 - Cbonds
Moody's assigned a provisional rating of (P)Baa3 to the VTB Capital S.A. Series 4 USD issue

On September 30, 2004 Moody's has assigned a provisional rating of (P)Baa3 to the Series 4 USD issue of medium
term loan participation notes ( the "Notes") to be issued by VTB Capital S.A. (the "SPV") under a US dollar debt
issuance program for the issuance of loan participation notes. The amount of the issue is not yet known but expected
to be USD 500,000,000.

The Notes issued by the SPV will be used to fund a loan by Deutsche Bank Luxembourg SA to the Open Joint Stock
Company Vneshtorgbank, a bank established under the laws of the Russian Federation ("VTB"). The Notes are term
issuances, which will be listed on the Luxembourg Stock Exchange.

The (P)Baa3 rating of the Notes is based primarily on:


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- The strength of the structure and the protection furnished by early amortization events.
- The ability of VTB, the ultimate obligor in respect of payments under the Notes, to make timely payments of
interest and ultimate payment of principal on the Loan.
- The effective segregation afforded by Luxembourg law of the SPV's rights to the Fiduciary Deposit Account and to
the loan repayments.
- The charge and assignment of rights and interests by the SPV and Deutsche Bank Luxembourg SA to the Trustee
for the Noteholders under English law.
- Triggers linked to the performance of the loan and to the ability of Deutsche Bank Luxembourg SA to act as
fiduciary.

The proceeds of the notes are deposited into a Fiduciary Deposit Account in Luxembourg established with Deutsche
Bank Luxembourg SA and used to make the loan to VTB. The notes are backed by the SPV's interests in and rights
related to the Fiduciary Deposit Account. The SPV will only account to the noteholders for amounts equivalent to
principal and interest (if any) received from Deutsche Bank Luxembourg SA under the Fiduciary Deposit
Agreement, and Deutsche Bank Luxembourg SA in turn will only account to the SPV for amounts received from VTB
under the Facility Agreement.

The Notes are secured by a charge in favour of the Trustee for the benefit of the note holders over the SPV's rights
to all payments of principal, interest together with any other amounts due to, and rights of the SPV under the
Fiduciary Deposit Agreement. Under the terms of the Fiduciary Deposit Agreement, upon the occurrence of an
Event of Default or certain events, Deutsche Bank Luxembourg SA will have assigned all of its rights under the
Facility Agreement to the SPV, which will have assigned all such rights to the Trustee for the benefit of the
noteholders.

VTB's Ba1 long-term bank deposit rating and Baa3 long-term foreign currency debt rating are based on the
expected state support in case of crisis, resulting from the bank's government ownership and importance to the
banking system as well as VTB's inherent financial strength illustrated by the consolidation of its financial position
and continued strengthening of its franchise aided by current positive economic developments in Russia.

Moody's issues provisional ratings in advance of the final sale of the securities. The ratings, however, only represent
Moody's preliminary credit opinion. Upon conclusive review of all transaction and associated documents, Moody's
will endeavour to assign definitive ratings to the notes. A definitive rating may differ from a prospective rating.

01.10.2004 - Cbonds
S&P: Lukoil Ratings and Outlook Unchanged

Standard & Poor's Ratings Services said today that its ratings and outlook on Russia-based oil company OAO
Lukoil (BB/Stable/--) remain unchanged following the Sept. 29, 2004, announcement that Texas-based
ConocoPhillips (A-/Negative/A-2) had acquired the Russian government's 7.59% stake in Lukoil.

Foreign direct investors have had inconsistent success investing in the politically sensitive oil industry in Russia.
Lukoil's current rating is constrained by the risk of operating in the Russian Federation, including the effects of
Russia's volatile tax and regulatory norms, which are sometimes applied in selective and unpredictable ways. The
simultaneous announcement that both companies have formed a joint venture to invest in the development of
resources in northern Russia and in Iraq, and that ConocoPhillips may increase its total stake in Lukoil to 10% and
ultimately to 20%, may become supportive of Lukoil's credit quality, but only in the long-run.

05.10.2004 - Cbonds
Fitch assigns Bank of Moscow’s bonds final ‘BB’ rating

Fitch Ratings, the international rating agency, has today assigned Kuznetski Capital S.A.’s USD250 million limited
recourse 8% loan participation notes due 2009 a final Long-term ‘BB’ rating. The notes have been issued solely for
financing a loan to Russia’s Moscow Municipal Bank - Bank of Moscow (“BOM”, rated Long-term foreign
currency ‘BB’) under a loan agreement.

BOM was founded in 1995 and is one of Russia’s 10 largest banks, with consolidated assets of USD4 billion at end-
2003. BOM has always been majority-owned by the government of the City of Moscow (The City of Moscow is rated
‘BB+’) and its Long-term rating is driven by the potential support from the City of Moscow. The City and
associated organisations are a substantial source of, at times cheap, funds for the bank. Likewise, lending to the
City or to parties closely related to the City and its leading players constitutes a significant element of the bank's
business. However, the bank has also been growing its retail operations very rapidly and has plans to expand
further its branch network both in Moscow and across the wider Russian Federation.


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05.10.2004 - Cbonds
Fitch assigns Promsvyazbank’s eurobond expected ‘B’

Fitch Ratings, the international rating agency, has today assigned Promsvyaz Finance S.A.’s upcoming issue of
limited recourse loan participation notes an expected Long-term ‘B’ rating. The notes will be used to finance a loan
to Russia’s Promsvyazbank ("PSB", rated Long-term foreign currency ‘B’). The rating is contingent upon receipt of
final documentation conforming materially to information already received and the final rating will be confirmed at
that time.

Notes will be issued by Promsvyaz Finance S.A., a Luxembourg-domiciled orphan special purpose vehicle (SPV) for
the sole purpose of financing fiduciary deposits with a fiduciary bank (J.P. Morgan Bank Luxembourg S.A.). The
deposits will in turn be used for the sole purpose of financing loans to PSB under a loan agreement. The SPV will
only pay noteholders amounts (principal and interest), if any, received from the fiduciary bank under a fiduciary
deposit agreement and the fiduciary bank will only pay the SPV amounts, if any, received from PSB under the loan
agreement.

The loan agreement between the J.P. Morgan Bank Luxembourg S.A. and PSB contains a cross default clause and a
covenant that J.P. Morgan Bank Luxembourg S.A.’s claims under the loan agreement will rank at least pari passu
with the claims of other unsecured and unsubordinated borrowers, save those preferred by relevant (bankruptcy,
liquidation etc.) laws. Other covenants limit mergers and disposals by PSB and its subsidiaries, and transactions
between the bank and its affiliates. PSB has also covenanted to maintain a Tier 1 capital adequacy ratio calculated
in accordance with Basel requirements of no less than 12%.

The loan agreement contains a negative pledge clause, which allows for securitisation by PSB, among other
permitted liens. Were such a deal to be undertaken, Fitch comments that the nature and extent of any over-
collateralisation would be assessed by the agency for any potential impact on unsecured creditors.

PSB was established in 1995 originally to serve the telecommunications and transport sectors. The bank's business
has since grown and diversified, and it ranks among the top 15 banks in Russia by assets. PSB is principally a
corporate bank, with its core clients from the telecommunications, securities trading, IT, construction, railways,
manufacturing, mass media, publishing, food production and retail trade sectors. PSB is ultimately owned by two
individuals, who also control a number of financial and industrial enterprises involved in IT, food production,
publishing, real estate and insurance. The bank is also an important provider of financial services to a number of its
sister companies operating in various sectors that are jointly controlled by PSB's major owners.

06.10.2004 - Cbonds
Southern Telecoms Co. RUR3.5 Bil Senior Unsecured Bond Assigned 'ruBBB-' Rating

Standard & Poor's Ratings Services said today it assigned its Russia national scale 'ruBBB-' debt rating to the
proposed Russian ruble (RUR) 3.5 billion ($120 million) senior unsecured bond due 2009, to be issued by Russia-
based telecommunications operator Southern Telecommunications Co. (OJSC) (STC; B-/Negative/--; Russia
national scale rating: 'ruBBB-').

"The credit quality of STC continues to suffer from aggressive investments over the past 18 months, which, if
pursued with such intensity over the next year, would likely result in lower ratings to reflect the negative impact on
the company's balance sheet structure," said Standard & Poor's credit analyst Pavel Kochanov.

The proposed bond issue is aimed at supporting STC's liquidity and planned capital expenditures in the fourth
quarter of 2004. Capital expenditures of more than 60% of sales in 2003-2004 explain the dramatic rise in debt
since year-end 2002. Total debt to EBITDA exceeded 4x, at June 30, 2004, compared with 1.3x at year-end 2002.
Despite the increased leverage, STC's debt maturity profile remains manageable, with no large debt liabilities due
for redemption in the short term. Nevertheless, given that more than 60% of STC's total debt consists of loans from
major Russian banks (primarily Sberbank, Alfabank, and Rosbank), the commitment
of these banks to restructure and extend credit facilities to STC has become an important rating factor.

Similar to other Russian issuers of domestic bonds, STC continues to face imminent refinancing risk due to several
put options, included in the proposed bond (April 2006 and October 2007) and previous bond issues (RUR1.5
billion in February 2005). Importantly, STC did not receive any calls from bondholders for early redemption in
September 2004 of its previous RUR1.5 billion bond issue, but the next put option of RUR1.5 billion in February
2005 poses a risk as market conditions might change.

06.10.2004 - Cbonds
Moody’s assigns Ba3 rating to Russian Standard Bank LPNs

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Moody's Investors Service has assigned a rating of Ba3 (on review for possible upgrade) to the upcoming issue of
loan participation notes issued by Dresdner Bank Aktiengesellschaft (Dresdner) on a limited-recourse basis for the
sole purpose of funding a loan to Russian Standard Bank (RSB) pursuant to a loan agreement between Dresdner
and Russian Standard Bank. The notes will be denominated in US dollars and the loan represents a senior
unsecured claim on the bank.
According to Moody's, the Ba3 debt rating is placed at the level of RSB's foreign currency deposits rating, which is
currently on review for possible upgrade following a recent announcement that Cetelem, consumer finance
subsidiary of BNP Paribas (rated Aa2 -- long-term Issuer Rating by Moody's), will acquire a 50% stake in the
bank's holding company, which in turn controls about 93% of Russian Standard Bank's shares.
Moody's notes that in 1999, Russian Standard Bank was the first bank to enter the Russian market with a consumer
credit focus. According to the bank, it currently controls a market share of around 40-50% in various segments of
consumer lending. The bank made a decision not to develop corporate business, with the exception of lending to
some retailers who are the bank's business partners. In addition, the corporate banking business is limited by the
strict covenants attached to funding from the International Finance Corporation and the European Bank for
Reconstruction and Development.

Russian Standard Bank is headquartered in Moscow, Russia and reported total IAS assets of RUB22.4 billion
(US$773 million) at 30 June 2004.

07.10.2004 - Cbonds
Moody’s amended Transneft’s rating outlook from stable to positive

On October 06, 2004 Moody's Investors Service has amended the outlook on Transneft's Baa3 senior implied and
Ba1 issuer ratings from stable to positive. The outlook change follows Moody's decision to adjust the outlook on
Russian Federation's Baa3 foreign and local currency debt ratings, since Transneft's senior implied rating is closely
linked to that of the Russian state, owner of 100% of Transneft's voting shares.

OAO AK Transneft, headquartered in Moscow, is the world's largest crude oil transportation company in terms of
pipeline length (as of July 1, 2004 -- 48,228km) and volume transported (414.8 million tons in 2003).

07.10.2004 - Cbonds
Moody’s changes outlook from positive from stable on Russian Railways rating

On October 06, 2004 Moody's Investors Service changed the outlook to positive from stable on the Baa3 long-term
unsecured issuer rating of Joint Stock Company ("JSC") Russian Railways.

The outlook change follows Moody's decision to change the outlook on Russia's Baa3 foreign and local currency
debt ratings, since the unsecured long-term issuer rating of Russian Railways -- which is at the same level as
Russia's sovereign rating for foreign currency debt -- is predicated upon the strong link between the Russian
Railways and the Russian State, as detailed in Moody's press release dated July 12th, 2004.

The rating agency said that the positive outlook change on Russia followed improved macroeconomic fundamentals,
details of which were outlined in a separate Moody's press release today.

Headquartered in Moscow, Russia, JSC Russian Railways is an integrated provider of rail services to the Russian
market. The company is the monopoly owner and operator of the country's rail infrastructure and offers cargo and
passenger transport services through its substantial fleet of locomotives and rolling stock. The company has
approximately 1.2 million employees and achieved a turnover of RUR 589 billion (US$ 20 billion) in 2003.

07.10.2004 - Cbonds
Moody’s placed Gazprombank’s rating on review for possible upgrade

On October 06, 2004 Moody's Investors Service has placed on review for possible upgrade Gazprombank's Ba2
long-term foreign currency deposit rating. At the same time Moody's has placed on review for possible upgrade the
Ba2 rating of the EMTN program of Gazinvest Finance B.V. that is unconditionally and irrevocably guaranteed by
Gazprombank. This action follows the announcement by Moody's, placing the ratings of OAO Gazprom -- the bank's
ultimate parent -- on review for possible upgrade.

According to Moody's, expected support from OAO Gazprom was the main determinant for placing the bank's
ratings on review for possible upgrade; Gazprombank is playing an important role in the strategy of its parent,
OAO Gazprom. The businesses of the two entities are closely linked and are likely to remain so in the future. This is
despite Gazprombank's recent initiatives to somewhat diversify its customer base. The rating is based on the

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majority ownership of the bank by OAO Gazprom and the high probability of support in case of need, as
demonstrated on several occasions in the past.

Gazprombank is headquartered in Moscow, Russia, and had total IFRS-consolidated assets of US$7.0 billion as of
31 December 2003.

08.10.2004 - Cbonds
Fitch assigned City of Moscow issue final ‘BB+’ rating

Fitch Ratings, the international rating agency, has yesterday assigned Dresdner Bank Aktiengesellschaft's EUR374
million loan participation notes due 12 October 2011 a final Long-term foreign currency 'BB+' rating.

The notes' proceeds will be used to fund the City of Moscow under a credit facility agreement. The liability of
Dresdner Bank Aktiengesellschaft towards the note holders is limited to City of Moscow's repayment of principal
and interests. This links the underlying credit risk of the notes entirely to the City of Moscow. This rating action
follows receipt of final documentation.

City of Moscow is rated Long-term foreign and local currency 'BB+' and Short-term 'B'. The Outlook is Stable.

08.10.2004 - Cbonds
S&P: Sibneft 'B' Ratings Off CreditWatch Following Yukos Share Return; Outlook Developing

Standard & Poor's Ratings Services said today it removed its 'B' ratings on Russian oil company OAO Siberian Oil
Co. (Sibneft) from CreditWatch, where they were placed on May 31, 2004. The outlook is developing.

The removal from CreditWatch follows the return by OAO NK Yukos (CC/Watch Neg/--) of a 57.5% stake in Sibneft
to the company's previous shareholders. Sibneft now has reduced exposure to the risks presented by Yukos' difficult
position, following this first step in the demerger process. Yukos' stake in Sibneft has now fallen to 34.5% from
92.0%. The return of Sibneft stock followed the invalidation of Yukos' stock issue, and so it did not involve any cash
compensation, which is positive for Sibneft's financial position.

"The rating on Sibneft remains constrained, however, by uncertainties surrounding Yukos' remaining 34.5%
shareholding. Other negative factors include Sibneft's aggressive corporate governance practices and financial
policy," said Standard & Poor's credit analyst Elena Anankina. "These factors are offset by Sibneft's high
profitability and cash flow generation, reduced debt, and continuing organic production growth."

The key negative factor, explaining why the outlook is developing rather than positive, is the uncertainty about the
strategy to be pursued by Sibneft and its shareholders regarding the return of the remaining 34.5% stake in the
company, including a 20% stake that Yukos acquired for $3 billion in cash, the amount it is now claiming back from
Sibneft shareholders through the courts. Sibneft could also be exposed to litigation if the return of the 57.5% stake
or further steps in the demerger process are questioned by tax authorities, minority shareholders, and Yukos'
creditors.

"Sibneft's strong operating and financial fundamentals could support an upgrade if the company's financial position
is not impaired by the demerger process or litigation and its financial policy and corporate governance practices
are clarified," added Ms. Anankina. "The potential downside pressure on the rating arises from uncertainties
related to potential litigation and further steps in the demerger process. Standard & Poor's would be concerned if
Sibneft significantly increased its leverage to finance a stock repurchase by the company or its former
shareholders."

08.10.2004 - Cbonds
Loan Participation Notes Issued By Promsvyaz Finance With Recourse to Promsvyazbank Rated 'B-' by S&P

Standard & Poor's Ratings Services said today it assigned its 'B-' senior unsecured debt rating, based on draft
Offering Circular documentation, to the proposed Loan Participation Notes to be issued by Promsvyaz Finance S.A.
(not rated).

The notes will be issued on a limited recourse basis, for the sole purpose of financing a fiduciary deposit with J.P.
Morgan Bank Luxembourg S.A., for the sole purpose of financing a loan to Promsvyazbank JSCB (PSB; B-
/Stable/C). The amount and tenor of the notes will be specified at
placement.



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"The rating on the Loan Participation Notes is fully based on the long-term counterparty credit rating on PSB," said
Standard & Poor's credit analyst Irina Penkina.

According to the trust deed, the issuer will charge its payment obligations in respect of the notes and--under the
trust deed--its rights to all payments in respect of the fiduciary deposit to J.P. Morgan Corporate Trustee Services
Limited, the trustee, for the benefit of the noteholders.

The ratings on PSB are constrained by the bank's funding weaknesses, a relatively concentrated loan portfolio, and
still-risky operating environment in Russia. Positive rating factors include the bank's good corporate franchise in
the developing Russian banking market, solid profitability stemming from good quality revenues, and the growing
economy. In addition, the bank benefits from supportive shareholders.

11.10.2004 - Cbonds
Moody’s changes to positive outlooks for deposit ratings of Russia’s Sberbank, Vnesheconombank and
Vneshtorgbank, upgrades Sberbank’s senior debt rating to Baa2

On October 08, 2004 Moody's Investors Service has changed to positive from stable the outlooks for the Ba1 long-
term foreign currency deposit ratings of Sberbank, Vnesheconombank and Vneshtorgbank.

This rating action follows the recent announcement by Moody's changing to positive from stable the outlook for the
Ba1 foreign currency bank deposit ceiling of the Russian Federation. Expected support in case of need, resulting
from the banks' government ownership, was the main reason for maintaining the deposit ratings of the three banks
at the ceiling for such deposits in Russia, says Moody's.

Moody's has also upgraded to Baa2 from Baa3 a rating of loan participation notes issued by UBS (Luxembourg)
S.A. on limited-recourse basis for the sole purpose of financing a loan to Sberbank. The outlook for the rating is
also positive.

According to Moody's, the rating of the senior unsecured debt has pierced Russia's sovereign ceiling for bonds of
Baa3. The level of the ratings reflects the important role Sberbank plays in the country's economy and banking
system, especially in the retail deposit market, together with the bank's majority state ownership. Moody's notes that
the likelihood of Sberbank receiving support from the government in case of need is very high, and is the primary
driver of the rating.

11.10.2004 - Cbonds
Fitch Affirms Russia’s MMK At Senior Unsecured 'BB-'

Fitch Ratings, the international rating agency, has today affirmed Russia-based Magnitogorsk Metal and Steel
Works’ ('MMK') Senior Unsecured foreign currency rating at 'BB-' (BB minus). The Outlook for the rating remains
Stable. MMK operates the largest single-site integrated steel plant within the Russian Federation.

The rating reflects MMK’s strong track record in financial performance and accessing capital markets, and its
planned focus on value-added products to support revenue growth. It also considers the company’s competitive
domestic positions and its ability to exploit the rising demand for steel in Russia as the domestic economy continues
to grow. MMK’s credit fundamentals are directly linked to Russian macroeconomic trends. Fitch acknowledges that
the company was able to benefit from the positive pricing development on the international steel market in FY03 and
its close geographical proximity to the buoyant Chinese market. The latter accounted for 31% of its total exports
and roughly 60% of exports sales in Asia in FY03 (FY02: 22% and 46%, respectively). In contrast to its domestic
peers, MMK has a limited control over raw materials supply, which could restrict the low-cost production
advantages that are characteristic of Russian steel producers. However, the rating is constrained by corporate
governance issues, in particular the level of transparency, given the concentration of control in the hands of the
management.

The Stable Outlook reflects Fitch’s expectations that MMK will continue to derive its revenue mainly from the
domestic market, as the Russian economy expands further. This is balanced by the uncertainty stemming from the
privatisation of the remaining 18% state-owned stake in MMK expected in Q404 and its potential impact on the
group.

In FY03, roughly 55% (FY02: 47%) of MMK’s sales were mainly generated in the domestic market, which is in line
with the company’s strategy. MMK’s regional location provides a natural advantage in implementing its strategy of
focusing on the domestic market. In particular, about half of MMK’s domestic sales are generated in the Ural
region alone, which has a high concentration of metal and machinery-building plants, inherited from the Soviet era.
MMK’s product mix is dominated by flat steel products (e.g. hot- and cold-rolled), which accounted for 75% of total

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output in FY03 (FY02: 70%). This is one of the most widely used products in high-growth sectors such as pipe
manufacturing and metallurgy, which accounted for 22% and 16% of the company’s total domestic shipments in
FY03, respectively.

In FY03, MMK posted a 48% (FY02:16%) increase in revenues, mainly due to price increase of metal commodities
in H203 and the strong domestic demand for steel products. As a result, EBITDA margin improved to 32% from
20% in FY02. To address MMK’s limited raw material supply, the management in FY04 acquired a controlling
stake in a domestic coal mine (Uregol in Kemerovo) with annual capacity of 2m tonnes, which will account for 29%
of MMK’s annual coal needs. MMK controls 13% of its annual iron ore consumption.

At FYE03, MMK’s debt maturity profile was balanced between short-term and long-term debt with roughly 49% of
total debt maturing after five years. About 97% (FYE02: 47%) of its total debt was unsecured. Fitch notes that any
increase in the level of secured debt is likely to be limited and in line with the current financial covenants of up to
USD380m. At FYE03, MMK had a cash surplus, while gross debt-to-EBITDA accounted for 0.6x (FYE02: 0.9x). At
30 June 2004, MMK had USD26m of unused committed credit facilities (FYE03:USD77m). Fitch considers the
financial covenant of consolidated indebtedness to consolidated EBITDA of 3.5x in the bond documentation in
October 2003 as loose. Against this background, comfort is gained from the tight internal financial targets in place,
MMK’s consistently conservative financial profile and strong cash generation in H104, which is expected to
continue.

11.10.2004
Fitch Rates Evrazsecurities' Tap Issue Final ‘B’

Fitch Ratings, the international rating agency, has today assigned EvrazSecurities S. A., Luxembourg's USD150
million senior five-year notes a final 'B' rating with Stable Outlook.

The new notes will be consolidated and combined with five-year USD150m coupon 10.875% notes issued in August
2004 (refer to Fitch comment on 13 August 2004) as a single series. Both issues are unconditionally and irrevocably
guaranteed by Cyprus-based Mastercroft Limited ("Mastercroft", rated Senior Unsecured ‘B’) and its subsidiaries
OJSC Novokuznetsk Iron and Steel Plant ("NKMK") in Russia, and Gibraltar-based Ferrotrade Limited.
Mastercroft's other subsidiaries, OJSC Nizhny Tagil Iron and Steel Plant ("NTMK"), OJSC Western Siberian Iron
and Steel Plant ("Zapsib") will each have a limited guarantee of both issues' principal amount. The rating action
follows the review of the final offer documents.

Under the bond documentation the proceeds can be used for financing acquisitions of mining assets, and repayment
of all amounts due under the existing loan facility provided for acquisition of such assets as well as for general
corporate purposes. The issuer is an orphan special purpose entity of Mastercroft that also issued the 2006 notes in
September 2003. Half of the total proceeds (USD300m) has been used to repay a bridge facility loan provided by
ING bank, CSFB and Commerzbank to acquire a Russian coal mine Kachkanarski GOK. The rest of the proceeds
will be used to finance future acquisitions.

The tap issue has an identical structure to that of the 10.875% notes, including the financial covenants described in
Fitch’s comment dated on 13 August 2004.

Mastercroft controls three large integrated steel plants within the Russian Federation. In FY03, Mastercroft's total
output was 13.9m tonnes, which placed the company as the leader in Russia and 12th largest in the world. The
rating reflects Mastercroft's leading domestic market positions in long steel products and a monopoly position in
railway transport steel products; its main customers are in the railway, construction and pipe-producing industries.

11.10.2004 - Cbonds
Fitch Upgrades International Moscow Bank's Individual Rating To 'C/D'

Fitch Ratings, the international rating agency, has today upgraded International Moscow Bank's ("IMB") Individual
rating to 'C/D' from 'D'.

The rating action reflects improvements in IMB's profitability, the quality of its revenue streams, a gradual
reduction in concentration levels and the continuing growth of its franchise. The Individual rating also takes into
account IMB's relatively low risk appetite, good risk management systems and experienced management. However,
Fitch notes that the bank's capitalisation is still lower than desirable, concentration levels on both sides of the
balance sheet remain high and provisioning of the loan book is low.




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IMB's Long-term 'BB-' (BB minus) rating was placed on Positive Rating Watch on 28 September 2004, following the
announcement of forthcoming changes to the bank's ownership structure (see www.fitchresearch.com for further
details). IMB is rated Short-term 'B' and Support '4'.

IMB was established in October 1989 as Russia's first joint venture bank with foreign partners. It has two 'strategic'
shareholders, Bayerische Hypo- und Vereinsbank ("HVB", 43%) and Nordea Bank Finland PLC (22%). Other large
shareholders include BCEN-Eurobank (20%) and the EBRD (10%). The shareholders structure is likely to change
in Q105 as Bayerische Hypo- und Vereinsbank Group and Nordea Bank Finland PLC expressed their intention to
increase their stakes to a controlling 53%, and to a blocking stake of 26%, respectively. IMB's core businesses are
in servicing large- and medium-sized domestic corporates, as well as trading in securities and foreign exchange.
The bank is also lending to smaller companies, and has a good position in retail banking in Moscow. IMB ranks
among the top 10 Russian banks in terms of total assets.

11.10.2004 - Cbonds
S&P Affirms North-West Telecom Gov. Score 'CGS-5+'

Standard & Poor's Governance Services said today it affirmed its corporate governance score (CGS) on Russia-
based fixed-line telecoms service provider OJSC North-West Telecom at 'CGS-5+'. The Russia national scale CGS
on the company was also affirmed, at 'CGS-5.9'.

"The active involvement of independent directors is an important governance factor at North-West Telecom. These
directors were instrumental in influencing several strategic decisions made by the company's main shareholder,
Svyazinvest, including the divestment of assets and the company's relations with its auditor. Independent oversight
of the audit process is another strong feature of the company's governance," said Standard & Poor's governance
specialist Oleg Chvyrkov. "The ability of minority shareholders to balance the influence of Svyazinvest has its
limitations, however."

The overall CGS on North-West Telecom is the result of four component scores on a scale of 1 (low) to 10 (high):

-- Ownership structure and external influences - 5.5
-- Shareholder rights and stakeholder relations - 7.0
-- Transparency, disclosure, and audit – 6.3
-- Board structure and effectiveness - 4.8
The strengths of corporate governance practices at North-West Telecom and improvements over the last year
include:

-- The role played by minority shareholders, who have influenced the appointment of four independent directors to
the board;
-- The creation of an active and influential independent accountancy and remuneration committee in July 2002;
-- The creation of an independent audit committee and a semi-independent nomination and remuneration
committee;
-- The positive role played by management in improving the quality of the investor relations process and; and
-- Improvements in transparency via detailed online disclosure.

Standard & Poor's analysis, however, identified some continuing weaknesses in the company's governance system,
including:

-- The lack of economic justification for some proposals and decisions made by the company's major shareholder;
-- The rapid turnover of CEOs over the past two years at the initiative of Svyazinvest: these changes were not
discussed by the full board, indicate the absence of an effective succession policy, and further highlight the limited
ability of minority shareholders to influence Svyazinvest's policies;
-- The absence of performance-based pay for senior executives and the link of directors' compensation, including
that of nonexecutives, to short-term financial indicators;
-- The limited background information about proposed candidates for board elections; and
-- The issue of a qualified auditor's opinion for the 2003 and 2002 IFRS financial statements, despite progress
toward full compliance with IFRS, reflecting the inadequacy of the reporting of certain balance-sheet items due to
technical and historical reasons; and
-- Nondisclosure of audit fees and the scope of nonaudit services provided by the auditor.

The revised CGS has also been influenced by amendments to Standard & Poor's analytical methodology, which now
places greater emphasis on the level of independent control over the audit process, and board independence and
effectiveness. "These developments in the methodology reflect the evolving nature of corporate governance global
practices and increasing investor interest in specific governance issues," added Dr. Chvyrkov.

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12.10.2004 - Cbonds
Fitch Assigns 'BB+' Rating To Vneshtorgbank's USD450 mln Eurobond

Fitch Ratings, the international rating agency, has today assigned VTB Capital S.A's USD450 million loan
participation notes due October 2011 a Long-term 'BB+' rating. Proceeds from the notes will be used to finance a
deposit with Deutsche Bank Luxembourg S.A. for the purpose of financing a loan to Russia's JSC Vneshtorgbank
("VTB").

The issue is the fourth under VTB's USD2 billion loan participation note programme. The programme is rated at
Long-term 'BB+' for senior notes with maturities in excess of one year, and Short-term 'B' for senior notes with
maturities of less than one year. Further details on the structure of the programme can be found in Fitch's
announcement dated 17 November 2003.

VTB was founded in 1990 and is Russia's second largest bank by equity and assets. Its consolidated assets totaled
USD11.2 billion at end-2003.

12.10.2004 - Cbonds
Moody’s placed Gazprombank’s Ba2 ratings on review for possible upgrade

Moody’s placed Ba2 rating of middle-term notes worth USD1.05 bln issued by GazInvest Luxembourg S.A., on
review for possible upgrade, according to the agency’s statement.

GazInvest issued bonds to financing of the credit, provided to Gazprombank by J.P. Morgan Bank Luxembourg. The
agency placed the middle-term notes rating on review for possible upgrade soon after it placed Gazpormbanks’s
deposit rating on review for possible upgrade.

13.10.2004 - Cbonds
S&P Rates Vimpelcom Proposed Loan Notes 'BB-'

Standard & Poor's Ratings Services said today it assigned its 'BB-' senior unsecured debt rating to JSC Vimpel-
Communications' (VimpelCom) proposed loan participation notes of up to $300 million to be issued by--but without
recourse to--UBS (Luxemburg) S.A., for the sole purpose of funding an intended loan of a similar amount to
VimpelCom.

VimpelCom intends to use the proceeds from the issue for funding possible acquisitions in Russia and/or the
Commonwealth of Independent States or for further investments in regional networks and refinancing of part of the
$250 million notes issue due April 2005. "Given the faster-than-expected growth of mobile penetration in Russia
and VimpelCom's new strategy of expanding its operations into Commonwealth of Independent State (CIS)
countries, a larger-than-expected increase in spending on capital expenditures and acquisitions could occur," said
Standard & Poor's credit analyst Pavel Kochanov. "Standard & Poor's believes, however, that the company has
built sufficient financial and operating capacity for such a strategic move without significantly jeopardizing its
financial profile and domestic market position."

VimpelCom's subscriber base is reported to have reached 20.6 million (including its subsidiary in Kazakhstan) at
Sept. 30, 2004, up from 11.4 million at Dec. 31, 2003, while its market share in the Russian mobile telecoms market
improved to 34% from 32%, respectively, according to ACM-Consulting. VimpelCom is expected to maintain its
position as the second-largest nationwide provider of mobile services and complete the most significant investments
into its GSM network in Russia over the next two years.

Despite continued average-revenue-per-user erosion (primarily the usual result of higher penetration), the company
continues to grow its EBITDA margins and operating cash flow--thereby maintaining adequate credit protection
measures. Allowing for the new debt issue, the company's total debt (not including customer deposits) to EBITDA is
likely to increase from the 1.1x at June 30, 2004, but is expected to stay well below 2.0x at year-end 2004. Free
operating cash flow is no longer expected to be positive in 2005, but will be so in 2006 instead. Importantly, the
company maintains adequate liquidity with about $244 million of cash at June 30, 2004, and proven access to
domestic and international capital markets.

14.10.2004 - Cbonds
Moody’s assigns (P)B1 rating to Vimpelcom’s new notes; existing ratings affirmed

Approximately US$1.0 Billion in Debt Securities Affected


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Moody's yesterday assigned a (P)B1 rating to the proposed US$ 300 million loan participation notes of Open Joint
Stock Company Vimpel-Communication ("VimpelCom" or the "company"). Concurrently, Moody's affirmed the
company's existing ratings. The outlook for all ratings remains stable.

Ratings affected are as follows:

- Senior implied rating affirmed at Ba3
- Unsecured issuer rating affirmed at B1
- $250.0 million in 10.45% senior unsecured loan participation notes due 2005 affirmed at B1
- $450.0 million in 10% senior unsecured loan participation notes due 2009 affirmed at B1
- Up to $300.0 million in proposed new senior unsecured loan participation notes due 2011 at (P)B1

Net proceeds from the new notes offering will serve to partly re-finance the company's US$250m in 10.45% senior
unsecured loan participation notes due 2005 and to provide funds for possible acquisitions and/or other investment
activities. The assigned ratings assume that there will be no material variations to the draft legal documentation
reviewed by Moody's and assume that these agreements are legally valid, binding, and enforceable.

Due to faster than anticipated growth, VimpelCom now expects the Russian market to reach maturity earlier than
anticipated. As a result, the company has now decided to start expanding outside of Russia and into the other CIS
countries. The implementation of the company's revised expansion strategy began with the acquisition of Kar-Tel
(an operator in Kazakhstan) which was completed in September 2004. Moody's therefore expects that VimpelCom is
likely to pursue additional acquisition opportunities in the CIS regions, going forward.

As a result of VimpelCom's revised business strategy, Moody's now believes that the company will not become free
cash flow positive until at least 2006 (on a full year basis) and absolute debt levels are now anticipated to
substantially exceed earlier expectations. Moody's notes, however, that the risk associated with VimpelCom's
increased debt levels is somewhat offset by the company's continued strong revenue growth and higher operating
cash flows. Going forward, leverage levels are expected to remain low on a debt to operating cash flow basis (i.e.
less than 2.0x debt to EBITDA).

The ratings continue to reflect the highly competitive operating environment in which VimpelCom operates; risks
relating to the company's rapid expansion strategy; and sovereign-related risk factors, including the lack of
regulatory transparency in the Russian telecommunications market (a recent example being the lack of new
numbers available for VimpelCom during several months of 2004). Positively, the ratings continue to be supported
by VimpelCom's strong market position (market share increased from 32% at the end of 2003 to 33% at the end of
August) and the company's improving operating cash flow generation and low debt levels (relative to operating cash
flow).

Headquartered in Moscow, Russia, VimpelCom is one of the country's leading providers of mobile
telecommunications services, under the "Bee Line GSM" brand, with revenues of US$980.6 million in the first half
of 2004.

15.10.2004 - Cbonds
Moody’s assigns provisional rating to the Rosbank eurobond

Approximately $200 Million of Debt Securities Affected.

On October 14, 2004 Moody's has assigned the following provisional rating to the debt issuance of Russia
International Card Finance S.A.: (P)Ba3 to the USD 150 million Class 2004 % Structured Receivables Notes due
2010.

The rating addresses the expected loss posed to investors by the legal final maturity. In Moody's opinion, the
structure allows for timely payment of interest and ultimate payment of principal with respect to the Notes by the
legal final maturity. Moody's ratings address only the credit risks associated with the transaction. Other non-credit
risks have not been addressed, but may have a significant effect on yield to investors.

The proceeds from the sale of the notes will be used by the Issuer, a Luxembourg bankruptcy remote SPV, to make a
secured loan to Rosbank. Rosbank, in turn, will grant in favour of the Issuer, a first priority security interest in the
Receivables, which are its rights to present and future debit and credit card receivables due from VISA and
MasterCard.

Moody's issues provisional ratings in advance of the final sale of securities, and these ratings only represent
Moody's preliminary opinion. Upon a conclusive review of the transaction and associated documentation, Moody's

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will endeavour to assign a definitive rating to the bonds. The definitive ratings may differ from the provisional
ratings set forth in this report. Moody's will disseminate the assignment of definitive ratings through its Client
Service Desk.

18.10.2004 - Cbonds
Fitch Assigns National Ratings To Four Russian Banks

Fitch Ratings-London/Moscow-18 October 2004: Fitch Ratings, the international rating agency, has today assigned
four Russian banks National Long-term ratings as follows:

Alfa-Bank: 'A(rus)'
Credit Bank of Moscow: 'BB(rus)'
Orgresbank: 'BB+ (rus)'
Rosbank: 'BBB(rus)'.

The banks' National ratings reflect their relative creditworthiness to each other as well as to the Russian issuers in
local currency in both the banking and non-banking sectors. All of the above banks are also rated by Fitch on the
international rating scale and their assigned National ratings are consistent with the level of international Long-
term local currency ratings for each bank in the list. However, greater credit differentiation is available on the
National rating scale.

The National rating of Alfa-Bank reflects its strong franchise and status as the largest privately-owned bank in
Russia, the quality and experience of the bank's management and to date its reasonable asset quality. However, the
rating also takes into account the bank's substantial cost base, significant concentration in the loan portfolio,
modest capitalisation and the low profitability of its commercial and retail banking businesses, which is
compensated by revenues received from investment banking activities.

The National rating of Credit Bank of Moscow reflects the bank's small size, limited franchise, the risks associated
with rapid loan growth and potential liquidity concerns. However, it also reflects the bank's solid capitalisation and
to date reasonable asset quality.

The National rating of Orgresbank reflects the bank's modest profitability, small size, limited franchise, the risks
associated with rapid loan growth and the level of related-party activity. However, it also reflects the bank's solid
capitalisation, adequate liquidity and to date reasonable asset quality.

The National rating of Rosbank reflects its significant commercial banking franchise and the potential to grow its
retail operations when the bank will either assume the business of or be merged with bank OVK, as well as its to
date reasonable asset quality. However, it also takes into account the bank's low profitability, significant
concentrations on both sides of its balance sheet, medium-to-high appetite for market risk, weak capitalisation and
low loan loss reserve.

18.10.2004 - Cbonds
Fitch assigns national ratings to Severstal and Uralsvyazinform

Fitch Ratings, the international rating agency, has today assigned two Russian companies National Senior
Unsecured ratings as follows:

OAO Severstal: ‘A(rus)’
OAO Uralsvyazinform ‘A+(rus)’

The companies’ National ratings reflect their relative creditworthiness to each other as well as to the Russian
issuers in local currency in all sectors. Both Severstal and Uralsvyazinform are also rated by Fitch on the
international rating scale (Senior Unsecured foreign currency ratings of ‘B+’ and ‘BB-’ respectively). The
companies’ assigned National ratings are consistent with the level of international Long-term local currency ratings
for each company.

Severstal’s rating reflects the steel producer’s increased control over raw materials supplies via a common
shareholding structure, and its focus on a value-added product mix, which together with specialisation in flat-steel
production, will underpin future cash generation. Severstal has carved out strong domestic market positions. In
contrast to its domestic peers, it is diversifying its operations outside Russia (e.g. acquisition of US-based Rouge
Industries). Severstal’s North America operations may benefit in the long-term from the buoyant US-steel market
and retained Rouge customer base, which is mainly from the automotive sector.


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                                                                                                     is@cbonds.info
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The rating for Uralsvyazinform reflects the telecommunication company’s strong market position in Urals and part
of Western Siberia in both fixed-line and mobile segments. Although tariffs on its key fixed-line services are
regulated, its exposure to regulatory risks is only modest. The company’s margins have been strong and Fitch
believes that the outlook for 2004 and beyond is positive in this regard. Organic growth has been solid, and should
be supported, among other things, by increasing long distance traffic and a rapidly expanding mobile subscriber
base. The company has a strong management team that keeps tight cost control, which should help to preserve
margins in the future.

18.10.2004 - Cbonds
Fitch rates Russia International Card Finance Notes Exp ‘B+’

Fitch Ratings, the international rating agency, has today assigned an expected rating of ‘B+’ to Russia
International Card Finance S.A.’s USD150million structured fixed-rate notes due 2010.

The transaction securitises existing and future international credit card voucher receivables generated by JCS
United Card Services (UCS) through its merchant acquiring business and due to JSCB Rosbank (Rosbank) from
Visa and MasterCard for settling the vouchers with the merchants. The rating of the transaction is based on UCS
and Rosbank’s ability to generate future credit card receivables which is measured by Fitch's going concern
assessment of both entities.

The transaction is structured as a loan from the issuer, Russia International Card Finance SA, located in
Luxembourg, to Rosbank. This loan is secured by an assignment of the receivables. Obligor notices and consents
will instruct VISA and MasterCard to deposit payments owed to Rosbank into a segregated offshore account.

Fitch's expected rating addresses the likelihood that cash flows generated by the assigned receivables will be
sufficient to make timely interest payments and ultimate principal repayments on the notes over the life of the
transaction. The expected ratings are contingent on receipt of documents conforming to information already
received and finalised legal opinions from transaction counsel.

19.10.2004 - Cbonds
Moody’s downgrade ratings on Yukos to B2/B3, under review for further downgrade

Moody's today announced that it has downgraded Yukos Oil Company's B1 Senior Implied Rating to B2 and the
Issuer rating from B2 to B3. Both ratings remain under review for possible further downgrade. Moody's does not
rate any specific debt in relation to Yukos.

Moody's rating action reflects an assessment of the current situation in relation to the Russian Government's
demand for payment of back-dated tax claims for 2000 and 2001. It now appears increasingly likely in Moody's
opinion that Yukos will sell or will be forced to sell specific assets to meet the outstanding tax claims rather than the
company being sold as a whole to an entity controlled by the Russian State, which could have had a beneficial
impact for lenders to Yukos from their current position. The previous rating action taken in July 2004 had factored
in a more balanced probability of outcome. Moody's currently rates the Russian Federation at Baa3 with a positive
outlook. Moody's believes that Yukos should have assets with sufficient value to meet the current outstanding tax
claims.

The B2 Senior Implied Rating, under review for downgrade, is an opinion of Yukos' ability to honour its financial
obligations as if it had a single legal entity and a single class of debt. The B3 Issuer Rating, under review for
downgrade, is an opinion of Yukos' ability to honour senior unsecured obligations and is a notch lower than the
Senior Implied reflecting the company's secured debt.

The review will focus on: (1) the impact of any sale of assets from Yukos to meet the existing outstanding tax claims;
(2) the probability of any additional claims for unpaid tax for 2002 and 2003; and (3) gaining clarity on the
company's current financial position

20.10.2004 - Cbonds
Fitch assigns Alfa’s eurobond “B+’

Fitch Ratings, the international rating agency, has today assigned Alfa MTN Issuance Limited’s USD190 million
8% medium term notes due April 2006 a Long-term ‘B+’ rating.

The notes are unconditionally and irrevocably guaranteed jointly and severally by Alfa-Bank, (rated Long- and
Short-term foreign currency ‘B+’ and ‘B’, respectively) and ABH Financial Limited. The proceeds from the issue
will be on-lent to Alfa Bank or ABH Financial Limited. The issue is the first under the USD400m euro medium term

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note programme, to which final ratings have been assigned at Long-term 'B+' for notes with maturities in excess of
one year and Short-term 'B' for notes with maturities of less than one year.

The deed of guarantee between Alfa Bank and J.P. Morgan Corporate Trustee Services Ltd (the trustee) contains a
covenant that Alfa Bank’s obligations under a guarantee in favour of the noteholders will rank at least pari passu
with all present or future unsecured and unsubordinated obligations, save those preferred by relevant provisions of
law and of general application. The terms and conditions of the notes also contain a covenant that notes will rank at
least pari passu with all other future outstanding unsecured and unsubordinated obligations of Alfa MTN Issuance
Limited, save for such obligations as may be preferred by provisions of law. The terms and conditions also contain a
cross default clause and other covenants, which limit mergers and disposals by ABH Financial Limited and Alfa
Bank and their subsidiaries, transactions with affiliates, changes of business and the sale of assets. ABH Financial
Limited has also covenanted to keep its total capital adequacy ratio calculated in accordance with Basel
requirements at no less than 8%.

The terms and conditions contain a negative pledge clause, which allows for a degree of securitisation by Alfa MTN
Issuance Limited, ABH Financial Limited and Alfa Bank. Were such a deal to be undertaken, Fitch comments that
the nature and extent of any over-collateralisation would be assessed by the agency for any potential impact on
unsecured creditors.

Noteholders will benefit from a put option in the event of a change in control of ABH Financial Limited and a
negative rating event in respect of that change of control.

Alfa Bank is the 100%-owned principal subsidiary of ABH Financial Limited. Alfa Bank’s principal activity is
commercial and retail banking. It is also active in investment banking, trade finance, insurance and asset
management. ABH Financial Limited also owns Alfa Capital Holdings Limited, which provides a wide range of
investment banking services, such as corporate finance, securities (mainly equity) brokerage, asset management,
private equity, research and proprietary trading.

27.10.2004 - Cbonds
Fitch Assigns Promsvyazbank’s Eurobond Final ‘B’ Rating

Fitch Ratings, the international rating agency, has today assigned Promsvyaz Finance S.A.’s USD100 million
10.25% limited recourse loan participation notes due October 2006 a final Long-term ‘B’ rating. The notes are to
be used solely for financing a loan to Russia’s Promsvyazbank ("PSB", rated Long-term foreign currency ‘B’) under
a loan agreement. Further details on the structure of the issue can be found in Fitch's announcement on 5 October
2004 (see www.fitchratings.com).

PSB was established in 1995 originally to serve the telecommunications and transport sectors. The bank's business
has since grown and diversified, and it ranks among the top 15 banks in Russia by assets. PSB is principally a
corporate bank, with its core clients from the telecommunications, securities trading, IT, construction, railways,
manufacturing, mass media, publishing, food production and retail trade sectors.

27.10.2004 - Cbonds
S&P Rates Diamond Co. ALROSA's Proposed Eurobonds 'B'

Standard & Poor's Ratings Services said today it assigned its 'B' long-term rating to ALROSA Finance S.A.'s
proposed issue of senior unsecured Eurobonds, which are guaranteed by the Russian diamond-mining company
ALROSA Co. Ltd. (ALROSA; B/Stable/--).

The exact amount of the planned issue will be determined during the placement. The bond proceeds are expected to
be used to refinance ALROSA's short-term debt.

"The debt rating mirrors the corporate credit rating on ALROSA as the issue will be unconditionally and
irrevocably guaranteed by the parent company," said Standard & Poor's credit analyst Elena Anankina. The
bondholders are, therefore, only exposed to ALROSA's credit risk. The Eurobond structure has been widely used by
various Russian issuers, including ALROSA in its first $500 million Eurobond issue maturing in 2008.

The corporate credit rating on ALROSA reflects the company's position as the world's second-largest diamond
producer (by value) in the relatively stable diamond industry, and its rich reserves and lucrative sales to the South
African diamond giant De Beers. The rating is constrained, however, by ALROSA's significant leverage and high
capital investments, which will limit free cash flow generation in the near term.

29.10.2004 - Cbonds

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Moody’s affirms Alrosa Senior Implied rating at B1; assigns (P)B2 rating to the proposed USD400-500 mln
notes of Alrosa Finance S.A.; upgrades rating on existing USD500 mln notes due 2008 to B2

Approximately USD 1.0 Billion in Debt Securities Affected

Moody's Investors Service today affirmed its senior implied rating and outlook on Alrosa Company Limited
("Alrosa" or the "company"). Concurrently, it assigned a prospective (P)B2 rating (subject to review of final
documentation) to the proposed USD 400-500 million senior unsecured notes due 2014 to be issued by Alrosa
Finance S.A. and guaranteed by Alrosa Company Limited. At the same time, it upgraded the rating on the existing
8.125% USD 500 million notes due 2008 and its unsecured issuer rating to B2. The outlook for the debt ratings
remains stable.

Ratings affected by this affirmation are as follows:

- The B1 senior implied rating for Alrosa Company Limited

Rating upgraded:

- USD 500 million in 8.125% notes of Alrosa Finance S.A. upgraded to B2 from B3
- The senior unsecured issuer rating on Alrosa Company Limited upgraded to B2 from B3

Rating assigned:

- (P)B2 rating to the USD 400-500 million senior unsecured notes of Alrosa Finance S.A due 2014.

Net proceeds from the new notes offering will serve to re-finance the company's medium and short-term
indebtedness.

The one-notch upgrade on the existing USD500.0 million notes and the (P)B2 rating on the proposed new notes
issued by Alrosa Finance S.A., a privately owned company incorporated with limited liability under the laws of the
Grand Duchy of Luxembourg and a wholly owned subsidiary of Alrosa reflect Alrosa's progress in reducing its
dependence on secured debt (secured debt represents about 8% of total debt). However, the one-notch difference
between the senior implied rating and the rating on the notes continues to reflect the rating agency's expectations
that Alrosa may require access to secured financing in order to fund its ongoing operations and investment
programs as allowed under its bond indenture. The (P)B2 rating also reflects the structural subordination of the
notes to significant amounts of debt at operating subsidiary levels in the capital structure (about 33% at 30 June
2004) which is expected to reduce going forward.
The B1 senior implied rating continues to reflect: i) Alrosa's leading market position in the world diamond market
(global #2) with an estimated 19% of global production; ii) its high quality gems production and significant
diamond reserves (precise details of which are still considered a State secret) which have been confirmed by
government ministries as supporting production at current levels until at least 2028; iii) the strong technical mining
expertise with particularly strong knowledge of mining in permafrost environments such as north-eastern Russia; iv)
the consolidated market structure and the group's long relationship with De Beers; v) Alrosa's strong export
orientation and USD cash flow generation and vi) the fairly new 5-year export quota allowing for a broader buyer
base.

However, the rating also considers: i) Alrosa's operating environment in Russia and the group's dependence on
mineral licenses and quotas issued by the Government of Russia and the government of Yakutia which if revoked or
amended for whatever reason, could significantly impair cashflow generation of the group; ii) Alrosa's high
investment needs and expected increased leverage over the next years as it shifts increasingly from open-pit to
underground mining, expands ore treatment facilities and expands geographically (such as in Angola); iii) the
company's exposure to fluctuations in the Rouble/USD exchange rate, in particular during times of a strengthening
Rouble and high internal inflation and iv) the significant export dependence on a single customer (De Beers) and
the trade agreement between Alrosa and De Beers which accounts for a significant share of Alrosa's exports (35%
of total sales) and is being reviewed by the European Commission in light of potential restrictive trade practices.

Moody's cautions that if Alrosa were forced to discontinue its trade agreement with De Beers, it may be challenged
to replace De Beers rapidly with its own direct selling organization. In addition, operating challenges, including
development of new diamond deposits and growing importance of technically more difficult and more expensive
underground mining, as well as the potential for environmental liabilities, pose additional risks.




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The stable outlook anticipates the successful completion and beginning of operations of new mines, improved
production efficiencies offsetting cost rises otherwise associated with underground mining, as well as management's
commitment to mantaining an adequate capital structure.

The indenture on the new notes has limitations on liens (existing secured interest at the issue date of USD 110.0
million in addition to a basket of USD 30.0 million and carve-outs for trade finance, project finance and USD 150.0
million with respect to accounts receivables). Whilst we note that the company is currently not using trade finance,
our assumption is that trade finance will remain limited. The proposed USD 450.0 million notes include, inter-alia,
limitations on permitted indebtedness (USD 1.2 billion unless its fixed charge coverage ratio is at least 3.5x) and
limitations on restricted payments (50.0% of net income). Structurally, the new notes will rank pari-passu to the
existing USD500.0 million notes.

Moody's also notes that until recently a fair portion of indebtedness has been short-term and secured by the
company's most liquid current assets, namely diamonds in circulation, though the level of secured debt has been
reducing significantly over the recent period. The remaining unencumbered assets, e.g. property, plant and
equipment, are largely subject to licenses and might therefore not be valuable in a liquidation scenario.

The assigned ratings assume that there will be no material variations to the draft legal documentation reviewed by
Moody's, and assume that these agreements are legally valid, binding, and enforceable.

Headquartered in Mirny, Russia, Alrosa Company Limited had total revenues for FYE 2003 of RUB 60.0 billion
(USD 2.1 billion) and an operating profit of RUB 10.1 billion (USD 349 million).

29.10.2004 - Cbonds
S&P: Russia's B.I.N. Bank Rated 'CCC+/C'; Outlook Stable; ruBB National Scale Rating Also Assigned

Standard & Poor's Ratings Services said today it has assigned its 'CCC+' long-term and 'C' short-term counterparty
credit and certificates of deposit ratings to Russia-based B.I.N. Bank. The outlook is stable. At the same time,
Standard & Poor's assigned its 'ruBB' national scale rating to the bank.

"The ratings reflect B.I.N. Bank's high lending concentrations with single customers, including related parties, and
its rather weak operating efficiency," said Standard & Poor's credit analyst Ekaterina Trofimova.

"These negative factors are partially mitigated by the bank's adequate capital position, supportive shareholders,
and relatively long track record in the Russian banking market."

With assets of Russian ruble (RUR) 19.9 billion ($690 million) at June 30, 2004, B.I.N. Bank is a midsize institution
ranked among the top 30 Russian banks. It is part of a larger financial/industrial group comprising several
companies in commercial real-estate development and in the oil sector, including the recently created oil company
Russneft (not rated), which is headed by Mr. Mikhail Gutseriev.

Standard & Poor's expects the bank to continue to grow in the medium term, and to benefit from the expected
growth in the Russian banking market. If Russia's economic growth reverses, however, B.I.N. Bank's high
operational leverage and customer concentrations would leave it particularly vulnerable to potential asset and
funding risks. No significant decrease in single-party concentrations is expected, however, due to the bank's focus
on large and midsize corporates.

The instability in the Russian banking market in the summer of 2004 highlights the Central Bank of Russia's difficult
task of cleaning up the country's financial sector while maintaining depositor confidence in the banks. Until the
sector's flaws are addressed, it will remain prone to turbulence. Should market turbulence damage the financial or
business position of the bank to a significant extent, the ratings could come under pressure.

"Income growth will remain a key challenge for B.I.N. Bank, given shrinking margins and a high cost base," noted
Ms Trofimova. "Future rating developments will depend on the bank's ability to sustain current adequate
capitalization, improve profitability, and achieve better diversification."

Note: The detailed information on any issue mentioned in the bulleting could be found on the Cbonds.info
bond issues database (http://www.cbonds.info/emissions/index.phtml).




                                                          56                              prepared by Igor Sazonov
                                                                                                    is@cbonds.info

				
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