Russian Equities Advance as Country Mulls Debt Issues

• By the tickerspy.com Staff
• On 11:43 am EDT, Thursday October 1, 2009

According to Bloomberg, Russia is looking to settle its trade debt this year.

Nearly twenty years since the Soviet Union disbanded, Russia still holds approximately $1.2 billion of Soviet-era commercial debt, reported Bloomberg, quoting a Finance Ministry official. With plans for the first bond issue since the 1998 Ruble Crisis, the government is looking to settle its obligations.

Chris Osborne, CEO of Troika Dialog USA, told Bloomberg, "The market would welcome some sovereign debt" if the pricing is right. However others stressed the importance of clearing up current obligations. Stefan de Brabanter, a sovereign debt officer at the Belgian Export Credit Agency, hopes Russia will "end this never-ending story" before attempting to begin a new borrowing program, according to the report.

As Russia unwinds its trade debt, and attempts its first bond issue in over a decade, equity investors will be tracking the Russia Stocks and ADRs Index. The government's stability has been a major issue for investors of Russian ADRs, and the success of a bond issue could signify just how much faith investors have in the country's economy.

Over the last month the Russia Stocks and ADRs Index has outperformed the S&P 500 by 16%. Steel giant Mechel (NYSE: MTL - News) was the top performer, up by 63% for the period. Meanwhile, tech firms Vimpel-Communications (NYSE: VIP - News) and CTC Media (NASDAQ: CTCM - News) added more than 25% gains.

The country's oil plays also showed strength. Gazprom (OTC: OGZPY - News) and Lukoil (OTC: LUKOY - News) were both up by double-digits in September. Surgutneftegas (OTC: SGTPY - News) is leading today's Russian rally with a 6% gain.

Rostelecom (NYSE: ROS - News) and Wimm Bill Dann Foods (NYSE: WBD - News) are weighing on the sector's daily performance, down by more than -1.5%. Rostelecom is the Index's only component to remain negative over the last month.

As of this writing, the Russia Stocks and ADRs Index is the top-performing tickerspy International Index over the last month, up by 19%.

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