Mortgage Agency to Issue Bonds

The country's mortgage agency plans to issue 16 billion rubles ($675.7 million) of mortgage-backed securities on the domestic market and hopes to tap the reviving global market for the bonds.

"This will be a 10 billion ruble issue in the fourth quarter [of 2008], and we are also planning an international deal worth 6 billion rubles," the head of the agency's structured finance department, Natalya Koltsova, told reporters.

"The structure of the deal is now being discussed. We are waiting for the situation to improve," Koltsova said.

Europe's mortgage-backed bond market seized up after a crisis in the U.S. subprime housing market prompted a global credit crunch last August, as investors shunned complex securities even where underlying credit quality remained good.

The Agency for Home Mortgage Lending is currently banned from placing mortgage-backed securities abroad but hopes the legislation will be changed.

Koltsova said the agency saw reduced demand for mortgage-backed bonds but counted on the support of the government, its sole shareholder, which is expected to allow the state Pension Fund to invest in its securities.

A subsidiary of the agency is currently placing a 10 billion ruble mortgage-backed security in two tranches on the secondary market. Koltsova said the placement would be completed in July to September.