August 13       - YUKOS CFO Bruce Misamore announced that the company could go bankrupt in as little as a few days.
                        - The Ministry of Communications pledged to resolve the new number deficit plaguing cellular operators in an expedited manner.
August 16       - Northwest Telecom issued additional shares as part of its merger with Lensvyaz and Komisvyaz.
August 17       - YUKOS sold 56% of its shares in natural gas producer Rospan to TNK-BP for $357 million.
                        - The Arbitration Court rejected YUKOS’s appeal to extend the deadline for back tax payment.
                        - Vympelkom received an additional 4 million numbers from the Minister of Communications. The company’s ADP grew by 5.1%.
                        - CenterTelecom sold 3.1 billion rubles of a 7-billion ruble bond issue.
August 18       - Duma Deputy Yuri Savelyev demanded an investigation of foreign capital involvement in Gazprom. The gas giant’s shares lost 12.5%.
                        - The Arbitration Court reversed its own ruling that freezing Yuganskneftegaz shares was illegal.
                        - The auction to sell 7.6% of state-held shares in LUKoil was postponed.
August 19       - The Arbitration Court confirmed that YUKOS had illegally issued stock in its merger with Sibneft.

The ruble rose confidently and consistently on the currency market last week. By Wednesday, the dollar had lost three kopecks under pressure from extremely high oil prices and related massive sales of hard currency earnings. Banks also made their tax payments, which had a negative effect on ruble liquidity. The IBC rate climbed to 5-7% p.a. and correspondent accounts fell to 189 billion rubles. However, the Central Bank was in complete control of the situation. The Central Bank’s plan to keep the exchange rate stable along with news of a Duma investigation into non-resident investors’ purchase of Gazprom stock caused a slight decline in the ruble. By Thursday, the dollar had already reached 29.23.
Despite the stronger ruble, quotes on the federal ruble bond market tended to fall for most of the week. Trading was light due to the “end-of-the-month” factor. On Wednesday, the Ministry of Finance conducted a series of additional placements intended to pay off GKOs and coupon payments. All told, around eight billion rubles enter the state coffers from GKO-OFZs and funds not involved in the auction made the secondary market heat up. Trading increased from a few hundred million to fourteen billion rubles, though prices moved in various directions.
The trend on the corporate and municipal bond market remained flat. Increased interest on the part of investors in third-tier bonds led to a small increase in minimum size of corporate bond issues. However, around a third of bonds in circulation declined in price, with Central Telegraph bonds leading the way down by losing more than 1%. The downward trend was also apparent in other telecom bonds and connected to an upcoming CenterTelecom placement. Municipal bonds saw similar declines and Moscow bonds were the main culprit. Thanks to fairly high ruble liquidity and with the dollar expected to climb, consolidation and the current trends in corporate bonds will likely continue until at least the end of the month.
Prices for government eurobonds grew confidently, bolstered by an increase in the value of benchmark assets. Nonetheless, domestic factors such as the bad news regarding Gazprom led to price adjustments. A decline in quotes on American bonds only made matters worse. As a result the Russian segment’s spread grew from 309 points on Monday to 312 points on Wednesday.
As the week began, optimism ruled on the stock market thanks to news that the investment bank Dresdner Kleinwort Wasserstein would appraise Yuganskneftegaz. The good mood did not last long, however, and by Tuesday the RTS Index had already begun to fall. In a break with tradition, this time Gazprom was the center of attention, losing 10.8% for the week. YUKOS (-5.5%), Surgutneftegaz (-1.7%), and LUKoil (-0.7%) also fared poorly. Tatneft and Mosenergo shares performed far better, as both gained 8.8%.

The Financier’s Date Book

August 25       Russky Standart Bank places 2 billion rubles in bonds
August 26       Baltika announces its second quarter results for 2004 according to the US GAAP

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