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. Last Updated: 07/27/2016

Promissory Notes Set To Be Issued

The Russian Commodity and Raw Materials Exchange will start trading next week in state promissory notes issued by the Finance Ministry to repay government arrears to enterprises, the head of the exchange said Friday.

"On Dec. 8, we will launch regular trading in state promissory notes," said Alexei Vlasov. "We expect to create a fast growing market, as several trillion rubles of these papers have already been issued."

The Finance Ministry started issuing the promissory notes Sept. 1 as a form of payment to enterprises in lieu of cash.

More than three trillion rubles ($920 million) worth of promissory notes have already been placed, a Finance Ministry official said.

The notes are to be redeemed from Feb. 9, 1995, and no restrictions on redemption are planned, she said.

Pavel Plishkin, head of the investment department at Mytishchinsky Bank, said his bank had already applied to trade the securities on the exchange.

"Our bank alone has been offered 150 billion to 200 billion rubles of these papers," he said.

"Directors of enterprises want to sell them as they desperately need money to pay back their own debts, and investors will buy them as they see returns of 195 percent annual for papers maturing on Feb. 9."

Alexei Vlasov said quotation of the promissory notes on the exchange would also help reduce Russia's endemic inter-enterprise nonpayment crisis.

"This is a way to put an end to the IOU crisis," he said.