03 May 2004 14:31
News: Russian back-up fund to hold foreign bonds
The Russian government is planning to invest the bulk of its Stabilisation Fund in foreign securities and is likely
to appoint outside investment managers, market watchers say.
The fund, which contains surplus tax revenues from oil and other industries, currently stands at about $5bn in assets
and is expected to reach $15bn by the end of 2005. It is intended to cover budget deficits and maintain the
government's solvency in the event of an economic downturn.
Since the fund's inception last year, the money has mostly lain idle in the Russian Central Bank awaiting a
decision from the government on how to invest it, according to a senior Finance Ministry official.
That decision is likely to see the fund entirely invested in international, AAA and AA-rated bonds, with a preference
for US Treasuries, UK gilts and other European government securities, according to Alexei Moisseev, a government policy
analyst at Renaissance Capital, Moscow.
Under the law that created the fund, once assets reach Rbs500bn ($17.3bn) the money can be invested in a wider range
of assets. Many politicians have taken that to mean investment in state-run infrastructure projects.
The rules, however, are being drafted by a team - including Marina Chekurova, head of the Agency for Restructuring
Credit Organisations, deputy finance minister Bella Zlatkis and deputy Central Bank chairman Alexei Ulyukaev - that is
known to take a modern, diversified approach to asset allocation, according to Elizabeth Herbert, director of Pallada
Asset Management, a Moscow affiliate of State Street Global Advisors.
Ms Herbert said: "The market expects that the rules on the Stabilisation Fund will mirror those for the Bank
Guarantee Fund, portions of which will be allocated to outside investment managers."
[Financial Times Mandate] |
RUSSIA IN FACTS
