October 8    - The Ministry of Natural Resources gave Yuganskneftegaz three months to eliminate license violations. YUKOS shares gained 1.4%.
                    - Shareholders approved the merger of Vympelkom and its subsidiary Impuls. The merger will put an end to the State Communications Regulation Agency’s accusations regarding Vympelkom’s operations in the Moscow Region. The company’s ADP grew by 1.2%.

October 11  - The Moscow Arbitration Court ruled in favor of tax authorities’ claim against YUKOS for 2001back taxes totaling $1.3 billion.

October 12  - Yuganskneftegaz was valued at $10.4 billion. YUKOS shares lost 8.6%.
                    - Gazprom and Petro-Canada signed a memo of agreement to explore the possibility of supplying compressed natural gas from Russia to the US and Canada by 2009.
                    - Gazprom placed all 5 billion rubles of its new bond issue on the MICEX at 7.72% p.a. yield.
                    - Novatek announced that it will list on the RTS, the first step toward an IPO.

October 13 - Golden Telecom announced plans to invest $40-50 million in developing its communications network in European Russia.

October 14  - Deputy Minister of Natural Resources Anatoly Temkin accused TNK-BP of violating its Kovykta license agreement.
                    - It was made public that YUKOS’s share in Yuganskneftegaz’s capital (76.8%) may be sold for $4 billion.

The silence on the currency market was broken by a dramatic change in quotes. The official dollar exchange rate fell by 10 kopecks for the week to 29.12 rubles to the dollar. There are two reasons behind this change: the increasing flood of export income and the Central Bank’s withdrawal from the market, as the bank did not want to sacrifice inflation rates to prevent the ruble from growing significantly stronger. The Central Bank, however, did not want any major market shakeups, either, and by Tuesday it returned with a bid of 29.1150 rubles to the dollar.
Investor activity on the federal domestic ruble bond market fell, perhaps in anticipation of the OFZ placement planned for October 20. Notably, neither the stronger ruble nor the favorable liquidity situation had any effect on the market. Trading on the secondary market concentrated on a handful of issues and prices changed only slightly.
On the corporate and municipal bond market, however, significant ruble liquidity was finally accompanied by a stronger ruble, which led to a dramatic rise in the attractiveness of ruble bonds. This was already apparent when Gazprom placed a new issue and successfully attracted very “cheap” money. Trading on the secondary market increased dramatically as prices for the majority of bond issues rose. The blue chips like Vneshtorgbank, Gazprom, and Vympelkom led the way. Other leaders on the way up were Probiznesbank, Nomos Bank, and Ak Bars, as well as Southern Telecom (YuTK), the Housing Mortgage Lending Agency, and Yakutskenergo.
The foreign debt market was troubled this week. At first, Russian eurobond quotes fell significantly due to recent bad economic news from the US. Then Russian eurobonds continued to slide thanks to the sharp decline in YUKOS stock. Investor activity was generally low due to the October 11 holiday in the US.
After two weeks of uninterrupted growth, the stock market saw a price adjustment. The RTS Index fell by 4%. The main reason behind this decline was YUKOS, which lost 7.3%. However, the leader of the decline was Mosenergo, losing 28.8%. Norilsk Nickel also saw a significant decline in price (-7.4%). This decline came due to the dangerous overheating of world commodities markets. In a single day, October 13, the price of nickel on the London Exchange fell by 13%. Only a few days before, analysts at Barclays Capital noted that real metal consumers had left the market and that the share of short-term speculative deals exceeded 50%. Among the blue chips, only Sibneft (+2.2%) and Sberbank (+0.7) wound up ahead.

The Financier’s Date Book

October 19 Home Credit Finance Bank places 1.5 billion rubles in bonds
October 20 Krasnoyarsk Territory places 1.5 billion rubles in bonds
October 21 Sevkabel places 0.5 billion rubles in bonds