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. Last Updated: 07/27/2016

Ministry Mulls Over New GKO Swap

The Finance Ministry has proposed reopening a swap of billions of rubles of debt frozen last year for new paper, Prime-Tass quoted the ministry's debt department chief as saying Wednesday.

Bella Zlatkis said the swap for investors with a "justified excuse" for not having exchanged early this year might be opened from Nov. 20 until Jan. 1.

The ministry sent its proposal to the government.

CS First Boston was the most outspoken investor to decline the government's exchange proposal, which it said was not attractive, and has proposed a scheme for investment of the funds from frozen GKO treasury bills into the real economy.

Zlatkis referred to a similar scheme, which she said would be considered after the swap and which would allow direct investment of funds held in special "S" accounts, where foreign investors keep ruble proceeds from the GKO swap.

The Economics Ministry would select investment projects, and the Central Bank would control money transfers, she said.

Zlatkis said the nominal value of outstanding frozen GKO debt was 14 billion rubles ($600 million).

When the government froze the ruble debt in August 1998, the exchange rate was about 6 rubles per dollar and the market, including OFZ ruble bonds, was worth nearly $40 billion.

Zlatkis also said the Finance Ministry would not issue new securities this year, though it had planned to do so earlier to relieve the pressure on the foreign exchange market.