November  -  4 The Arbitration Court in Chukotka supported a lower court’s decision that required Yukos return 14.5% of its shares in Sibneft to the company. Sibneft’s stock gained 2.4%.

                     The government chose Morgan Stanley as a consultant in the Gazprom-Rosneft merger.

                     The Industry and Energy Ministry recommended putting a three-year moratorium on changes to the configuration of wholesale generating companies (OGK).

November 5 - Sberbank released financial results for the first nine months of 2004 according to Russian standards. The bank’s net profits rose by 27% compared to the same period in 2003.

November 8  - Chair of the Yukos Board, Viktor Gerashchenko, announced that the Menatep Group may sell its share of Yukos capital. Yukos’s ADR rose by 14.9%.

November 9 - The Moscow Arbitration Court froze 34.5% of Sibneft stock belonging to Yukos.

Severstal made a proposal to the Canadian company Stelco to buy out its assets.

After a week and a half of a stable exchange rate at 28.77-28.78 rubles to the dollar, the American currency once again began to fall last week. On November 5, the dollar lost 10 kopecks once the Central Bank stopped propping it up and sank to 28.66 rubles to the dollar, the lowest level since early April. However, after the long weekend, the rate once again stabilized, and the dollar even managed to regain 2 kopecks thanks to market factors such as the end of the decline of the dollar on international exchanges and the high ruble liquidity in the banking system. Due to significant intervention on the part of the Central Bank, correspondent accounts exceeded 300 billion rubles.

The much stronger ruble stirred up investor activity all across the spectrum of state ruble bonds. However, prices stopped rising after news came regarding US debt, which was much higher than predicted and caused a decline in T-note prices. This in turn led to a small decline in quotes for Russian domestic debt, but ruble bonds soon recovered. For the week, the weighted average yield on state bonds fell from 6.69% to 6.56%. By the end of the week, investors calmed down and prices for the majority of issues stabilized.

Last week corporate and municipal bonds continued their upward climb. The energy industry saw the most growth in the corporate sector, while metal companies saw the least. All bonds grew at about the same pace with only top-tier bonds lagging slightly, which is typical for periods of continued growth as second- and third-tier bonds catch up. Ruble liquidity remains extremely high, and the bond market faces few threats to further growth in the near future.

The foreign debt market headed downward as US T-notes fell due to bad macroeconomic news. On November 5, yield on Russia-30s grew by 14 basis points, while the Russian segment’s spread decreased slightly. Then, as prices underwent a technical adjustment, Russian eurobonds grew slightly and yield on Russia-30s fell to 6.75%.

The week’s big event on the corporate eurobond market was Alrosa’s placement of eurobonds maturing in 2014 at 8.95% p.a. According to the placement’s organizers, demand for the $300-million issue totaled $1.7 billion. The successful placement led to a price increase for Alrosa’s issue maturing in 2008, and to an increase for Severstal bonds maturing in 2014.

The stock market grew slowly last week, and the RTS Index rose by a mere 1.8%. Yukos was once again the center of attention, as its shares gained 12.1% from November 5-9 and then just as dramatically lost 8% on November 10. Other stocks saw less extreme changes. Sberbank led the blue chips this week and grew by 6.8% after releasing strong financial results. Gazprom also performed well, gaining 4.6%, as did Rostelekom, gaining 4.2%. Among the outsiders was Mosenergo, which lost 0.7%.
                            
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