Russia 01 (May 08 - Jul 10)

[kennynah]

what's russia's population ?

[millionairemind]

what's russia's population ?

140MM and decreasing...

[kennynah]

only 140mm....

[LenaHuat]

Yes, men die young because of alcoholism, AIDS, TB and previously wars.
Moreoever, Russian women are pretty well educated and they do not want too many babies.
For a country that spans some 10 time zones, the population is so small

[iam802]

Oligarchs Seek $78 Billion as Credit Woes Help Putin

http://www.bloomberg.com/apps/news?pid= ... refer=home

By Yuriy Humber and Torrey Clark

Dec. 22 (Bloomberg) -- Russian oligarchs are lining up for $78 billion of Kremlin loans to survive the credit squeeze, handing Prime Minister Vladimir Putin the opportunity to increase government control of the nation’s biggest companies.

Just 12 years after they gained ownership of the former Soviet Union’s industries by bailing out the government, the tables have been turned. More than 100 business leaders are vying for loans from Putin and the administration of President Dmitry Medvedev because Russian companies have about $110 billion of foreign obligations due next year, according to the central bank, double the total owed in Brazil, India and China.

Business leaders who tripled international debt in the past three years are putting up part of their stock as collateral for government support because they’ve been hobbled by tumbling commodity prices and the biggest drop in the ruble since Russia’s default in 1998. Putin already is aiding billionaires Roman Abramovich and Oleg Deripaska and considering requests from Dmitry Pumpyansky of pipemaker OAO TMK, OAO Severstal’s Alexei Mordashov and AFK Sistema’s Vladimir Yevtushenkov.

“Some of them will definitely lose their property, either to the state or to investors,” billionaire Alexander Lebedev, 49, said in a Dec. 8 interview, 11 days before Deutsche Bank AG demanded early repayment of a loan guaranteed by 3 percent of Moscow-based ZAO National Reserve Corp.’s 29 percent stake in OAO Aeroflot, the national airline. “They’ve been over- borrowing and sales of their companies have been falling.”

Loans-for-Shares

The oligarchs, Russian business leaders who used their political influence to help gain assets after the collapse of communism, essentially dictated the policies that allowed them to gain control of the nation’s biggest companies in the 1990s by providing financing to the government that was never repaid.

Anatoly Chubais, who oversaw the government’s sale of assets through the so-called loan-for-shares program, said in an interview in 2000 that the plan was necessary to create “big private capital” and help then-President Boris Yeltsin win reelection in 1996 to prevent a return to communism. Chubais, 53, is now chief executive officer of Moscow-based Russian Nanotechnology Corp.

Vnesheconombank, the Russian state lender known as VEB, is responsible for handling the bailouts. In return for one-year loans, VEB is requiring a representative at the company and the right to veto any debt or major asset sale, according to the bank’s Web site. Putin, 56, is head of its supervisory board. Borrowers offer shares, assets or export revenue as collateral.

Fewer Oligarchs

“It’s extremely unlikely they’ll all be able to repay in a year,” said Zina Psiola, a money manager at Clariden Leu AG in Zurich with $220 million in Russian equities. “Some oligarchs will no longer be oligarchs.”

At least 10 of the 25 wealthiest owners have faced margin calls from lenders since August as Russia’s worst financial crisis since 1998 wiped $230 billion from the value of their equity, according to data compiled by Deutsche Bank and Bloomberg.

Profits for four of Russia’s largest steel producers as well as Moscow-based TMK, the biggest maker of pipes for the oil and gas industry, will fall by about 50 percent to $10.5 billion next year as prices of the metal plunge, according to Clemens Grafe, an economist at UBS AG in London. That may leave the companies unable to pay for anything beyond their $10.3 billion of debt in 2009.

“If they have to pay this then they have no money for capital expenditure, no nothing,” Grafe said.

Shrinking Reserves

Prospects for refinancing debt are dwindling. Russia’s war with Georgia, a 75 percent drop in oil and the worsening credit crisis led investors to pull $211 billion from the country’s stocks, bonds and currency since August, according to BNP Paribas SA. The withdrawals weakened the ruble by 17 percent against the dollar, forcing the government to drain $163 billion, or 27 percent, from foreign-currency reserves. The ruble fell to the lowest level in almost three years against the dollar today.

Russian companies have about twice as much foreign debt due in 2009 than the $56 billion total owed by companies and the governments of China, India, and Brazil combined, according to data compiled by Commerzbank AG and RBC Capital Markets.

The leaders of Russia, Kazakhstan and three other former Soviet states agreed last week to form a $10 billion fund to help their economies weather financial turmoil, Kazakh President Nursultan Nazarbayev’s press service said on its Web site today, without providing more details.

State Control

Greater state involvement may reassure investors, said Jerome Booth, head of research at Ashmore Group Plc in London, which manages $32 billion of emerging-market assets including Russian corporate debt.

“There’s less chance of mass defaults in Russia than in Western Europe,” Booth said. “There’s a degree of state control in the economy already, so this will be more of the same.”

The prime minister, saying he has no intention of nationalizing the economy, pledged on Dec. 4 to offer loans and buy stakes in companies that solicit help, releasing collateral and selling back the holdings later.

Putin, who served eight years as president before becoming prime minister, provided $12 billion of loans since October to companies such as those backed by Abramovich, 42, and Deripaska, 40, and pledged $38 billion more. That covers only half the amount sought. Among the applicants is Pumpyansky, 44, of TMK, which owes $1.7 billion in 2009, more than forecast earnings. Yields on TMK’s dollar bonds due September 2009 topped 80 percent last month. TMK plans to delay some investments and is seeking to refinance with longer-term debt, according to an e- mailed statement.

Deripaska Selling

Deripaska is selling Moscow-based Soyuz Bank and may part with control of insurer OAO Ingosstrakh in Moscow, Vedomosti reported last week. Named Russia’s richest man by Forbes in April, Deripaska ceded stakes in auto-parts maker Magna International Inc. in Canada and German builder Hochtief AG to banks in October after the stocks lost more than half of their market value.

VEB’s $4.5 billion loan allowed Deripaska’s United Co. Rusal to keep a 25 percent stake in OAO GMK Norilsk Nickel, Russia’s biggest metals producer. A further $1.8 billion went to Evraz, the steelmaker part-owned by Abramovich.

Deripaska said he’s seeking to sell stakes in “practically all” his companies including Rusal, the world’s biggest maker of aluminum, to pay off loans, according to comments in the Wall Street Journal confirmed by spokesman Sergei Babichenko today. Deripaska said he hopes to have new investors in the companies by end of March.

Sistema, Evraz

Yevtushenkov’s Sistema in Moscow may seek as much as $2 billion from Moscow-based VEB to pay debts next year.

Moscow-based Evraz and Cherepovets-based Severstal didn’t respond to requests for comments.

“Not all of them are going to be helped out,” said Kieran Curtis, who helps manage $787 million in emerging market debt at Aviva Investors Ltd. in London. “I’m not convinced we know who is going to get state funds and that will be a major factor in terms of rollovers and redemptions.”

Vladimir Potanin, the biggest owner of OAO GMK Norilsk Nickel shares, may lose them to the government within a year, Vedomosti reported today, citing an unidentified Kremlin official. The shares are pledged against a $3 billion loan from state-controlled lender OAO VTB Group. Potanin has received margin calls on the debt after the stock lost value this year, the Moscow-based newspaper said.

Without a revival in commodity prices or state help, some Russian companies risk failing, according to Pacific Investment Management Co., which runs the world’s largest bond fund.

“It really depends on whether they can weather the storm with metals prices,” said Tim Haaf, Pimco emerging-market fund manager in Munich, who helps oversee $50 billion of emerging- market debt including Russian bonds. “We’re very conservative on Russia.”

[millionairemind]

Ruble Falls to Record Low Versus Euro as Russia Weakens Defense
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By Denis Maternovsky

Dec. 26 (Bloomberg) -- The ruble fell to a record low against the euro as Russia's central bank extended six weeks of devaluation to compensate for falling oil prices.

The ruble fell 1.4 percent to 40.8160 per euro at 11:36 a.m. in Moscow, the lowest since the European currency was introduced in 1999. It declined 1 percent to 29.0045 against the dollar, a four-year low, capping a 20 percent drop since early August.

Russia's reserves, the world's third largest, have fallen by a quarter since August to $451 billion as the central bank sought to prop up the currency and export revenue decline with falling crude prices. Standard & Poor's cut Russia's credit rating this month for the first time in nine years to BBB on concern the country is wasting its foreign currency reserves defending the currency.

“The central bank tries to devalue the ruble as fast as it only can without attracting too much unwelcome attention of the speculators, many of whom are on vacation now,” said Evgeny Nadorshin, a senior economist at Trust Investment Bank in Moscow. “The less speculations the more reserves the central bank keeps for itself in the short term.”

The currency has weakened 15 percent against the dollar and 12 percent against the euro this year as oil, the nation's biggest exporter earner, lost 62 percent and the global credit crisis prompted investors to pull out of emerging markets. Russia's RTS stock index has dropped 72 percent this year compared with a 56 percent decline in MSCI's emerging-market index.

Fourth Time

Bank Rossii allowed the ruble to fall more than 1 percent against its target basket of dollars and euros for the fourth time in a week and the 11th time since Nov. 11, according to a central bank official who declined to be identified. The currency lost 1.2 percent against the basket, which is 55 percent dollars and 45 percent euros, to 34.3191.

Barclays Capital says Russia's economy will sink into a recession next year as the price of Urals crude, the country's main export blend of oil, tumbles from a record high in July. Urals has fallen 77 percent since then to $32.34 a barrel, less than half the $70 Russia needs to balance its budget next year.

With oil at “very low levels” Bank Rossii ”prefers more safety in case it goes even lower,” according to Nadorshin.

Industrial production shrank the most last month since 1998, when the country defaulted on $40 billion of domestic debt and the ruble plunged more than 70 percent against the dollar.

[millionairemind]

Political games... Russia's economy is in deep trouble if it does not get both the gas and oil prices up soon...

Russia, Ukraine Poised to Resume Talks After Gas Halt (Update1)
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By Henry Meyer and Daryna Krasnolutska

Jan. 2 (Bloomberg) -- Russia and Ukraine prepared to resume talks in their dispute over natural gas prices after OAO Gazprom cut supplies to the former Soviet state for the second time in three years.

Ukrainian President Viktor Yushchenko said in a statement yesterday the two sides are near a compromise, urging state utility NAK Naftogaz Ukrainy and Gazprom, Russia’s gas exporter, to meet again in the next one or two days. Gazprom also proposed talks.

The repeat of an energy standoff between the former Soviet neighbors risks further souring Russia’s ties with the West, months after its war with U.S. ally Georgia. Russia, which supplies a quarter of Europe’s gas, mostly through Ukraine, cut Ukrainian deliveries in January 2006 amid a similar dispute. That shutdown reduced gas flows to Europe and led to questions over both countries’ reliability as energy suppliers.

Russia stands to look “brutal and ruthless” while Ukraine’s reliability as a supplier to Europe will be “called into question and its squabbling leadership will lose credibility domestically and abroad,” the Carnegie Endowment for International Peace, a Washington-based research group, said in an e-mailed commentary.

Gazprom cut supplies to Ukraine at 10 a.m. Moscow time yesterday after the country rejected a Russian offer to sell it gas this year at $250 per 1,000 cubic meters, and insisted Russia pay higher transit fees. Naftogaz Chief Executive Officer Oleh Dubina said Ukraine offered on Dec. 31 to pay Russia $235 per 1,000 cubic meters, compared with the 2008 rate of $179.50.

Talks Urged

February gas rose 0.97 pence, or 1.7 percent, to 59.50 pence a therm, according to data from the ICE Futures exchange in London at 8:50 a.m. local time. That’s equal to $8.66 a million British thermal units. A therm is 100,000 Btus. It rose as high as 60 pence earlier today, the first trading day after Russia’s supply cut.

The European Union urged Russia and Ukraine to “rapidly” resolve their dispute and said it counted on assurances gas supplies would continue uninterrupted. A Ukrainian delegation led by Energy Minister Yuriy Prodan left on a tour of European capitals to hold talks on the dispute, according to a government statement.

Gazprom spokesman Sergei Kupriyanov said yesterday price wasn’t the main issue holding up an agreement, telling reporters in Moscow the Ukrainian delegation that broke off talks on Dec. 31 didn’t have a mandate to sign a contract.

European Supplies

“We are getting the impression that there are some political forces in Ukraine that are very interested in seeing a gas conflict between our countries,” Gazprom Chief Executive Alexei Miller said on Dec. 31. “All responsibility for this situation lies with the Ukrainian side.”

Miller said in a statement on the Gazprom Website that Ukraine would have to pay $418 per 1,000 cubic meters for its gas, the European market rate, following its rejection of the $250 offer.

The threat to European energy supplies is less severe than during the 2006 dispute, because liquefied natural gas shipments have diversified supplies and utilities say they have sufficient inventories. Ukraine says it has gas in storage equivalent to about 35 percent of annual consumption.

In 2006, some consumers, including in Hungary and Italy, registered shortfalls in shipments in the shutoff, which lasted for more than two days. Gazprom blamed Ukraine for causing the shortages by stealing gas, a claim rejected by the Ukrainian side.

Ruhrgas Prepared

Ukraine is guaranteeing the stable transit of Russian gas to the European Union, Yushchenko and Prime Minister Yulia Timoshenko said yesterday in a joint statement on the president’s Web site.

Ukraine faces “serious consequences” in its relations with Russia and its reputation among consumers in EU countries should it disrupt Russian natural-gas supplies to Europe, Russian Prime Minister Vladimir Putin warned on Dec. 31.

Gazprom yesterday halted deliveries of 110 million cubic meters a day of gas destined for Ukraine. Gas pumped to European customers was increased by 20 million cubic meters above normal volumes to 326 million cubic meters a day, Kupriyanov said.

E.ON Ruhrgas AG, the gas unit of Germany’s largest utility, said it is prepared for a reduction of Russian gas supplies, and could secure shipments from Norway and the Netherlands. It would reach limits if the dispute led to “serious” cutbacks that lasted a long time and winter was especially cold, E.ON Ruhrgas said. Germany is Russia’s main gas market.

Debt Payments

In Austria, which gets 51 percent of its gas from Russia, the largest oil and gas company, OMV AG, said it had enough gas in storage to ensure supplies for its customers. FGSZ Zrt, a unit of Mol Nyrt. which operates Hungary’s transmission network, said in an e-mailed statement the country hasn’t had any problems with gas supply.

“There’ll only be a shortage if the conflict lasts a long time,” said Ben Warner, spokesman for GasTerra BV, a gas- trading venture between the Dutch state, Royal Dutch Shell Plc and Exxon Mobil Corp., yesterday by phone. GasTerra is based in Groningen, the Netherlands.

The failure to agree on new contract terms came after Ukraine sought to defuse the conflict by pledging to settle part of debts of $2.1 billion for gas received in November and December, plus fines.

The U.S. would like to see a restoration of normal deliveries and the two sides “should be resolving their differences through good-faith negotiations, without supply cutoffs,” White House spokesman Gordon Johndroe said in an e-mailed statement.

Funds Transfer

Naftogaz said on Dec. 31 it transferred $1.52 billion to RosUkrEnergo AG, the Swiss-based trader half-owned by Gazprom that imports the gas from Russia, and will seek international arbitration over at least $450 million in fines for late payment levied by Gazprom.

Naftogaz on Dec. 31 also asked for a transit rate for Russian gas of $1.80 per 1,000 cubic meters per 100 kilometers (62 miles), while Yushchenko’s office said $2 would be an appropriate tariff. That compares with the agreed 2008 rate of $1.70. Russia is refusing to renegotiate the transit tariff, saying its agreement runs until the end of 2010.

[winston]

Since August, when the real process of deterioration in the [Russian] Ruble began, it has fallen almost 25%. Weakness in commodity prices generally, and weakness in energy prices specifically, weighs heavily upon the Ruble, and so long as commodity prices wane so too shall the Ruble.

Moscow's budget for this year is predicated upon Russia's chief oil export, Ural's crude, trading above $70/barrel. It is instead trading approximately $43.

We do indeed tend to forget that it is not the Saudis who are the world's greatest oil exporter, and it is not Norway, nor Mexico, nor Venezuela, but is indeed Russia.

Falling oil prices are a weight dragging Russia down, and so long as crude prices fall, so too shall the Russian economy, and so too the Russian ruble.

– Dennis Gartman
The Gartman Letter

[iam802]

Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year

http://www.bloomberg.com/apps/news?pid= ... refer=home

[millionairemind]

Ruble Tumbles Most in Decade as Speculators See Target Breaking
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By Emma O’Brien

Jan. 29 (Bloomberg) -- Russia’s ruble had its biggest two- day drop in a decade against the dollar as investors speculated the central bank will be forced to widen its target trading band after draining 35 percent of foreign-currency reserves.

The ruble depreciated 3 percent today to 34.9189 per dollar, the weakest since January 1998. The currency lost 5.2 percent in two days, the most since March 1999. It slipped as much as 2.3 percent to 45.6615 per euro, the lowest since the European currency’s introduction in 1999.

While Bank Rossii pledged last week to defend the ruble at 36 per dollar, that target may be “very quickly” breached, said Gaelle Blanchard at Societe Generale SA in London. Russia spent a record $11 billion in a day last week to support the exchange rate, after a 30 percent plunge against the dollar since August, according to Moscow’s Trust Investment Bank. Russia’s reserves, the world’s third-largest, fell $9.7 billion last week to $386.5 billion, Bank Rossii announced today.

“As long as the central bank gives these targets then speculators are going to have something to aim for,” said Blanchard. “Right now the market is convinced it wants to see the ruble lower.”

The slump in oil and signals Russia is in recession are weighing on the ruble, Blanchard said.

The central bank has avoided intervening in the exchange rate since announcing a new wider trading range on Jan. 22, Alexei Moisseev, head of fixed-income at Moscow investment bank Renaissance Capital, said yesterday.

The ruble was 2.4 percent lower at 39.6680 against the central bank’s basket of about 55 percent dollars and the rest euros. Bank Rossii manages the currency to limit swings that harm the competitiveness of Russian exporters.