Russia Bonds Still Confront a Deep Chill

By LIAM DENNING During the cold war, Kremlinologists pored over every utterance of Russian officials for the slightest sign of a thawing in attitudes. These days, Russians look for any sign that global credit markets are turning warmer. Gazprom provided some hope this week by selling a 400 million Swiss franc ($353 million) Eurobond, the first such issue for a Russian company since last summer. At best, though, this represents detente, not the fall of the wall. Earlier reports suggested Gazprom hoped to raise $500 million. Issuing in Swiss francs suggests the larger dollar and euro-denominated pools remain closed. Gazprom's quasi-sovereign status makes it a special case. And coming on the heels of sharp tightening in Russian sovereign credit default swaps suggests a desire to capitalize on investors' apparent increased comfort with risk. Associated Press The main control room in the Russian gas giant Gazprom headquarters in Moscow. Gazprom provided some hope in Russia that credit markets are improving. How long this lasts is critical. The International Monetary Fund's enhanced resources, announced Thursday, should help. But IMF-induced stabilization will tempt many emerging-market sovereign and corporate issuers to also test the market, and crowd it. ING says Russian external debt falling due in 2009 and 2010 totals $214 billion. Signs that Moscow is backing off from a mass bailout of overstretched Russian companies mightn't help alleviate investors' concerns. Roland Nash, head of research at Russian brokerage firm Renaissance Capital, reckons ruble-denominated bond issues are now defaulting at a rate of about one a day. Larger, "strategic" companies should fare better. But foreign holders of Russian corporate debt will be glad to have simply survived the recent storm without suffering a default. They are unlikely to be hungry for another big helping. Write to Liam Denning at liam.denning@wsj.com