November 25   - LUKoil signed an agreement with PDSVA regarding LUKoil participation in oil and gas projects in Venezuela.
                         - Yukos announced that it will not be able to implement its long-term crisis management plans. Yukos shares lost 20%.

November 26  - The board of directors at UES approved the establishment of two more generating companies (TGK) uniting six northwestern and Siberian companies via leasing agreement.
                        -Baltika released its financial results for the first nine months of this year and demonstrated a 6% increase in net profits.

November 29  - Federal tax authorities ordered inspections at Norilsk Nickel subsidiaries.
                         - The Deputy Chair of the Central Bank, Konstantin Korishchenko, announced that the CB plans to reduce the mandatory rate of hard currency sales for exporters from 25% to 10% and to limit its direct intervention in the currency market.

November 30   - The Federal Service for Financial Markets approved the issue of Rosneftegaz stock, which brought the merger of Gazprom and Rosneft one step closer.

December 1     - Gazprom officially confirmed that it will participate in the auction of Yuganskneftegaz scheduled for December 19.
                         - VSMPO Avisma and Boeing extended current contracts for titanium supply to 2010.

December 2     - Economic Development Minister German Gref criticized the government’s ever stronger role in certain industries, in particular regarding Gazprom’s possible purchase of Yuganskneftegaz.
                         - The Lithuanian government will sell its stake in Mazeikiu Nafta, despite Yukos’ request that the decision be delayed. Yukos already owns 53.7% of the Lithuanian oil company.

The big event on the currency market this week came as the dollar fell below the psychologically significant level of 28 rubles to the dollar. Early in the week, it was still possible to talk about stability on the market due to the dollar’s slower decline on world exchanges versus other leading currencies. However, starting on Tuesday, the dollar continued its rapid downward slide and by Thursday crossed a dangerous line. The final results: the dollar sank to 27.99 rubles. Even the Central Bank could not help, though according to some estimates it bought up around $1.5 billion on the market.

The yield on domestic ruble bonds rose notably this week, despite the substantially stronger ruble and high liquidity. Only OFZ issues 46014 and 27018 proved exceptional. Light trading combined with additional placement auctions played their part as GKO-OFZ turnover fell by almost half. This week’s lack of activity was preceded by last week’s heavy trading. Vneshekonombank announced that it had invested almost 80% of the pension savings at its disposal in government bonds.

Top-tier bonds performed poorly this week on the corporate bond market, which made perfect sense as their yields have already been very low for quite some time. Initial placements are also having an impact on the market. In November alone, companies raised more than 20 billion rubles on the market, with around 39 billion rubles planned for December. The leader in turnover was Mechel. Telecoms declined the most, while banks and financial institutions saw minor growth.

This week on the foreign debt market was marked by a decline in prices for most Russian state eurobonds brought about by the negative turn of events on the US Treasuries market. The decline in quotes only came to a halt toward the end of the week thanks to a general rise in prices for emerging markets. For the week, the yield on Russia-30 bonds was 6.8%.

The stock market is in the throes of a powerful downward trend. The RTS Index fell by 4.4% compared to last week, getting very close to 600 points. Almost all of the blue chips lost ground. Not unexpectedly, in the wake of bad news Yukos fared worst of all, losing almost 40% before trading stopped. Surgutneftegaz stock fell by 12%, UES by 12%, and Rostelekom by 10%.

The Financier’s Date Book

December 7      JFC places 1.2 billion rubles in bonds, and Itera 2 billion.
December 8      RZD (Russian Railways) places three bond issues totaling 12 billion rubles.
                          Roskhlebprodukt and Rosselkhozbank place 1 billion and 3 billion rubles in bonds respectively.
December 9      The cabinet will discuss the proposed Law on Mineral Resources.