Russian Fixed Income Investments

noreply@blogger.com (GRinvest.org) — Fri, 30 Oct 2009 11:46:00 +0000

Ruble reaches the new records again. Russian Central Bank keeps ruble emission on a leash trying to reduce inflation to pre-set 10-11%. Most of economists argue that lack of cash in the economy might cause a negative effect especially during the crisis. But fear of hyperinflation is stronger then troubles of some (most) small and midsize Russian businesses.

noreply@blogger.com (GRinvest.org) — Tue, 06 Oct 2009 13:17:00 +0000

Today US dollar marked 29 rubles. Is dollar getting weaker or ruble got stronger? Please follow our discussion in a weekly newsletter including expert's opinions.

noreply@blogger.com (GRinvest.org) — Tue, 08 Sep 2009 12:28:00 +0000

Russian Central Bank might regulate foreign loans to Russian commercial banks. Ru financial institutions used to borrow up to 50% of passives before the crisis. An average level amongst Russian banks was 15% in the summer of 07. Russians consider 30% foreign money in passives as a warning sign (don’t compare to trillions of US Fed debt to foreign investors…).

We foresee more RU CB defectiveness in a future but current regulations don’t show how this would affect direct investments to Ru enterprises.

noreply@blogger.com (GRinvest.org) — Sun, 19 Jul 2009 20:42:00 +0000

Today is the 40th anniversary of the moon landing. Two and a half hour moon Aldrin's walk broke communism and the snail move toward free market economy in USSR had begun. New generation of Russian politicians must have forgotten the history and trying to restore "the centrilized economy" in Russia. Please find more in our newsletters regarding the analysis and predictions about newly formed government corporations in Russia.

noreply@blogger.com (GRinvest.org) — Sun, 12 Jul 2009 14:23:00 +0000

Following summit in Moscow with 2 presidents, there were plenty of comments and opinions. It's nice that the presidents met and "hung-out a bit". Despite their "body language" wasn't showing a lot of personal chemistry, a pragmatic relationship could be a lot more efficient than "Putin-Bush friendship".

noreply@blogger.com (GRinvest.org) — Fri, 12 Jun 2009 12:51:00 +0000

The times are interesting both politically and economically in Russia. Prime Minister Putin recently traveled to a small town to demand a local business pay wage arrears to employees after protests erupted. This highlights a disconnect between state and local economies, governments, and businesses which are short of cash, and the central government which still has a large surplus of cash. To highlight the dissatisfaction of Moscow, President Medvedev warned governors that failure to meet economic challenges could result in their dismissal. This is a situation well worth watching and we will keep you updated.

noreply@blogger.com (GRinvest.org) — Wed, 03 Jun 2009 12:52:00 +0000

Russian SEC changed the rules for companies that offer IPOs on the foreign exchanges. Most of IPOs have been sold on LSE, NYSE and GSE. Russian companies could sell up to 25% of their common stock, for instance, TMK sold 14.4% in 2006, OGK-5 and TGK-5 sold 20% and 15% in 2007 respectively. Now Russian companies are allowed to distribute only up to 5%. What it means for investors? Less supply and most likely higher demand.

noreply@blogger.com (GRinvest.org) — Mon, 01 Jun 2009 02:01:00 +0000

Russian Fixed Income market is in the tough shape. 49 bonds have been defaulted in 2009. Bad debt amount according to RBC exceeds 80 bln rubles. Total lack of risk management, bad assets in the balance sheets of major investment firms in Russia and negative (-1…..-55%) performance throughout the industry make Russian government to create a “Russian Mutual Fund” to accumulate all defaulted bonds from private institutions. Jokingly saying, Russians are trying to found a “toilet fund” to flush all bad bonds at the expense of Russian taxpayer. Is this good news? Find more in our May 09’s Newsletter.

noreply@blogger.com (GRinvest.org) — Wed, 20 May 2009 13:46:00 +0000

We at GR Invest are excited about many billions in Rubles the Russian government has pledged to support and encourage small and medium sized enterprises. While we have no specific recommendations at this time it is encouraging to see action being taken to encourage growth in what is the foundation of any successful economy, small and medium sized businesses. Coupled with specific tax policy, this should be positive for the entire economy in the future.

noreply@blogger.com (GRinvest.org) — Mon, 18 May 2009 22:23:00 +0000

We at GR Invest are optimistic about the construction sector, residential housing in particular as growing consumer demand will push new construction rates higher. The government is indicating it will increase funding to help consumers purchase affordable housing. Needless to say, this will help many industries and many companies in particular. We will be featuring several of them in the form of recommendations.

noreply@blogger.com (GRinvest.org) — Wed, 13 May 2009 21:12:00 +0000

Now could be the best time to look into equities and fixed income securities in the energy sector. We feel energy prices have reached a floor, although it is tricky to try and predict an exact time they will return to levels last seen a year ago. In addition to our belief that prices will not be headed downward, the Russian government has identified the energy sector as a key strategic sector in the national interest, and we believe they will devote all resources need in order to stave off any emergency in the sector.

noreply@blogger.com (GRinvest.org) — Tue, 28 Apr 2009 12:24:00 +0000

There is a very little activity on Russian fixed income market today. Still many good picks are available with the potential 15-20% APY. What to do with the unpredictable ruble/$ rate? We bet it will be safe for 2009-2010.

noreply@blogger.com (GRinvest.org) — Thu, 02 Apr 2009 12:54:00 +0000

Will Russia lose the rights for the Olympic Games 2014? Building all infrastructures on a small spot of city of Sochi is very expensive and painful for locals. The future use of stadiums and arenas is unclear. The cost of construction exceeds 25 bln.

If Russians would not overcome the corrupt business practices and Games 2014 might be a failure.

noreply@blogger.com (GRinvest.org) — Wed, 18 Mar 2009 16:00:00 +0000

Could this be a good time to bargain hunt for debt and stock in Russian blue chip companies? The answer is you should probably be thinking about it and planning your next moves if history is any lesson. Companies such as major Russian energy firms as well as others will definitely weather the downturn no matter what, and at the prices they are selling for now, it’s an opportunity that presents itself not very often so now is the time to start planning your moves.

noreply@blogger.com (GRinvest.org) — Thu, 05 Mar 2009 14:23:00 +0000

There is a complete unity amongst all experts and commentators regarding how tight the relation between Russian modern wealth and oil prices. But there is a lot of controversy about the energy price prognosis. Since last few years clearly demonstrated energy prices have been manipulated, perhaps, like FX Networks’ “Damages” showed, guessing and gambling is what we are left with.The only thing we might be confident is the new US administration is not up to promulgating oil prices as hard as the previous one.

noreply@blogger.com (GRinvest.org) — Mon, 02 Feb 2009 16:25:00 +0000

Today’s Moscow Minute will be on a bright spot of the future in Russian telecommunications. VimpelCom just finished a Wi-Fi project involving dozens of Russian cities. Look for wireless access to be a huge area for growth in Russia’s future, possible even bigger than you might have imagined. There are reasons common to any country such as consumer convenience and demand. There are reasons unique to Russia as well, as it makes economic sense to cover large distances with wireless as opposed to conventional wire or even fiber optics.

noreply@blogger.com (GRinvest.org) — Thu, 29 Jan 2009 20:02:00 +0000

The past months have brought nothing but bad news to the global oil industry, but for Russian oil companies, there is a modest positive development to report on. Prime Minister Putin signed a bill lowering the tariff on oil exports today. The reduction will take place in February. Export tariffs occupy a percentage of every barrel of oil exported so any reduction will be like an increase in the market price of oil and should be seen in the bottom line of these companies immediately.

noreply@blogger.com (GRinvest.org) — Mon, 26 Jan 2009 17:48:00 +0000

An addition and correction to yesterday’s entry of the Moscow Minute. While we are predicting the natural gas crisis between Russia and Ukraine, we were talking about the near-term to intermediate-term, of course not long-term. The reasons for this involve the complexities of the Ukrainian political environment. If the anti-Russian candidate wins the next presidency of Ukraine, all bets are off and another crisis is very possible. The reasons for this include political and nationalistic identity as well as economic motivation. If the pro-Russian candidate wins, look for a much more harmonious relationship for much the same reasons. Areas of potential development and cooperation are many in the fields of business, trade, and foreign policy. We will be watching elections in Ukraine for their economic impact upon Russia, and you should too.

noreply@blogger.com (GRinvest.org) — Sun, 25 Jan 2009 18:34:00 +0000

Many of you following the recent natural gas controversy between Russia and Ukraine might be wondering if it is really over. No sooner had the agreement been signed, than rumblings were heard from Kiev voicing protestations the agreement was unjust. So, is it really over? Our answer is most assuredly yes. Explaining the dynamics of Ukrainian politics would require more room than today’s Moscow Minute has to give. A brief explanation of the situation is there are competing political interests in Ukraine posturing for upcoming elections. So if the question do these headlines and quotes mean anything other than normal political fighting, that answer is no. There were rational and logical reasons of self-interest why Ukraine was a participant, arguably the instigator as well. Their public relations have taken a beating with their EU allies. If another situation were seen to be clearly instigated by Ukraine, not only is it a confrontation they can not win, relations with the EU would go from bad to worse, which would have direct economic consequences for Ukraine. This is just another example of following the news and learning to see what is not explicitly stated, and learning to ignore much of what does make it to the headlines.

noreply@blogger.com (GRinvest.org) — Sun, 25 Jan 2009 15:38:00 +0000

Many people might be wondering with the rapid deceleration of the Russian economy that has occurred over the past six months, why hasn’t real estate dropped more drastically all over Russia, especially in Moscow? Although it has fallen somewhat, and certainly the construction industry and any new project have been certainly stopped in their tracks, it still has not dropped to the degree one might have expected. One major reason for that has been is that many Russians in times of economic uncertainty hang on to their apartments as a hedge against a depreciating Ruble. In many countries gold becomes a source of economic security, in Russia it is real estate. Real estate is lightly taxed compared to most countries in the West, so there is no real burden in keeping a property indefinitely. Russians are also increasingly hording Dollars and Euros at rates not seen for many years. Thirty one billion dollars is the figure households have increased their holdings of foreign currency over the past three months alone. What the immediate future holds in terms of the devaluation of the Ruble is hard to say, so many factors are involved it is as hard to contemplate intelligently as any major economy around the world.

noreply@blogger.com (GRinvest.org) — Wed, 07 Jan 2009 20:15:00 +0000

A member of the Duma was recently quoted urging the government to reduce the VAT tax instead of or in addition to the reduction in income taxes that are being enacted and planned. This does have a certain undeniable logic to it as the companies that would benefit from a reduction in income tax represent a small proportion of the overall total and most of the companies in dire need of assistance will not see any. As was mentioned, a VAT tax would benefit everyone, encourage economic growth long-term and in the near-term assist many companies teetering on the abyss survive the economic crisis. It’s a rare economic policy where the more equitable decision is more than likely the better decision.

noreply@blogger.com (GRinvest.org) — Mon, 05 Jan 2009 17:04:00 +0000

A dispute between Ukraine and Russia over natural gas costs is making worldwide headlines. While it is difficult to predict where the events will lead in the near-term, you might be asking what long-term effects this will have upon Russia in general and Gazprom in particular. A major pipeline bypassing Ukraine, called North Stream is currently under construction and will be completed in the next two to three years. Additionally, in the approaching years look for more natural gas exports to grow and pipelines to be built between Russia and its Asian neighbors, as agreements have been signed in the past couple of years, they will come to fruition in the years after North Stream is completed. So while it is difficult to predict how negative the current dispute will get and difficult to gauge its impact, the approaching years should see less vulnerability to the Russian energy industry.

noreply@blogger.com (GRinvest.org) — Wed, 24 Dec 2008 17:20:00 +0000

Looking into next year, we recommend Gazprom bonds, and not just for reasons of attractive yields, one of the largest energy companies in the world, and the great potential for long-term appreciation. The bottoming of natural gas prices is another good reason as well. You must also consider what the energy policy of the United States will be for at least the next four years and what effect that will have upon the world. The new administration will almost definitely join world global treaties limiting the type of pollution found in inefficient automobiles and standard coal fired plants. This means a greater emphasis on alternative energy to keep CO2 levels down, but from a practical standpoint alternative energy is many years away from being produced on a mass level. So what we are left with is not just more nuclear power, but much more natural gas produced power plants, and this is not taking into consideration natural gas powered automobiles. Natural gas is considered a practically benign fossil fuel because of its low pollution and because it is ready to help meet the energy needs of today, it will only increase its utilization.

noreply@blogger.com (GRinvest.org) — Mon, 22 Dec 2008 19:53:00 +0000

There has been much talk and speculation concerning Russia joining OPEC. While current market conditions make it a possibility with some logic, our prediction is it is not likely to happen. Before asking if its is politically feasible or probable, one must be familiar with the drilling realities of Western Siberia and the Arctic regions. Because of the extreme environment, drilling can not just be stopped, put on hold, and started again later at the flick of a switch. If drilling is stopped in that environment, equipment will break and the fields will have to be drilled all over again, with new equipment. Storing the oil instead of exporting would create its own set of problems. Russia joining a natural gas group of exporters is a much more likely scenario. How likely though, remains to be seen.

noreply@blogger.com (GRinvest.org) — Wed, 17 Dec 2008 16:40:00 +0000

The Russian equity markets are up over 20% off their lows, but for this momentum to sustain itself and continue into the future, there must be several things fall into place. Firstly, global commodities (including energy) must stabilize and demand must return. There was some overproduction when energy prices were at their height and an equilibrium must be reached, in other words, current inventories must be brought down. Secondly, sooner or later people will look around and recognize the permanent reality of a weaker dollar, and when this happens it will only compound the effect of rising commodities as they are still priced in dollars. Thirdly, people must emotionally learn to deal with a changed world and realize it is different than it used to be, but the world will not end anytime soon, they must break out of their paralysis of thought and action they are in. I don’t think all these things will happen in the next week, but, it is realistic to assume all will happen in the near to intermediate future, and when they do, a gradual price increase in commodities might give way to a sudden meteoric rise.