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. Last Updated: 07/27/2016

Prices on MinFins Tumble As Further Freeze Reported

Prices on Finance Ministry bonds tumbled Tuesday after reports that another $57 million in the face value of so-called MinFins might have been frozen, securities dealers said.

MinFins are dollar-denominated bonds, and roughly $10 billion worth have been issued since 1993 as a popular instrument for Western investors. But the MinFin market was temporarily shaken earlier this year when the Finance Ministry froze an estimated $24 million to $30 million of suspected stolen bonds.

In London, prices on MinFins dropped by as much as 1.5 points during trading Tuesday as rumors circulated about new problems.

Under Russian law, MinFins are not allowed to leave Russia. But title to some of the stolen bonds reached foreign investors through a chain of trades. Officials with the Finance Ministry and Vneshtorgbank, the custodian for two-thirds of all MinFin bonds, weren't available to comment on reports of more frozen bonds.

Investors feared that the emergence of more problems would complicate efforts to unfreeze the earlier pool of bonds.

"Any confirmation [of more frozen bonds] would tarnish the market's reputation, just as participants are coming to terms with the 'frozen-bond' issue," Renaissance Capital said in a research note Tuesday.

More negative news about MinFins could cloud future offerings, such as a debut Eurobond issue that Russia is planning soon.

"The logic is that if MinFins are in trouble, the Eurobond is in trouble, and the principals are in trouble," said Richard Grey, emerging markets analyst with Bank of America in London.