Traders Say Risk Low on Eurobonds

LONDON -- The default risk on Eurobonds issued by former Soviet foreign-trade bank Vneshekonombank and due to mature in the next few years is low, traders said Thursday.

Russia, which took over the former Soviet Union's debt, said last week it would fully repay a 500-million Deutsch mark ($327 million), 8.875-percent five-year Eurobond issued by Vneshekonombank in 1990, which matured on Feb. 8.

"There was never really any doubt they wouldn't pay up," said one London-based trader who specializes in Russian debt. "These [Vneshekonombank] Eurobonds are seen as a good risk."

Russia's foreign trade bank is also called Vneshekonombank.

The Soviet Union issued a total of eight Eurobonds, of which two have already matured. The rest mature in 1995, 1996 and 1998.

Vneshekonombank made its Eurobond debut in January 1988 with a 100-million Swiss franc ($77 million), 5-percent 10-year bond.Its last Eurobond was issued in 1990.

The only problem would be if the International Monetary Fund doesn't approve a $6.25 billion standby loan being negotiated with Russia.

Deputy Prime Minister Oleg Davydov said this week Russia will fulfill its debt obligations despite continuing uncertainty over whether the IMF will grant the loan.