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. Last Updated: 07/27/2016

Business in Brief

Ruble Hits 29.24

MOSCOW (Reuters) Ч The ruble fell to a fresh low of 29.24 per dollar on Wednesday, hit by high liquidity and low overnight credit rates, dealers said.

The rubleТs weighted average for today settlement dropped to 29.2385 per dollar from 29.2119 on Tuesday in a unified session of eight exchanges. Volume was an average $114.86 million.

Based as usual on the sessionТs results, the Central Bank cut its official next-day rate to 29.24 per dollar after 29.21 rubles per dollar on Tuesday.

"The Central Bank did not sell dollars, but was buying export revenues yesterday. And rubles hit the market today, increasing liquidity and triggering dollar demand," said Alfa Bank dealer Alexei Bukleyev.

New Mosenergo Boss?

MOSCOW (Reuters) Ч The board of local power monopoly Mosenergo has asked shareholders to vote on whether to sack general director Alexander Remezov following an audit by parent company Unified Energy Systems.

UES chief executive Anatoly Chubais said last Friday that Remezov might be fired after the audit revealed "serious claims" against him. But the company said Wednesday it would ballot members by post and a decision was expected by Sept. 1.

"Ballots will be collected until 5 p.m. on August 31 and nominations will be accepted until July 24," the spokeswoman said. "The decision will be announced on September 1."

Remezov has refused ChubaisТ demand he resign and has charged UES with trying to force him out as it tries to ensure loyalty ahead of a sector overhaul that envisages the consolidation and privatization of regional utilities.

He has said that UES accused him of overpaying for vehicles and auditorsТ services. He has denied any wrongdoing.

$80M LUKoil Offer

CALGARY, Alberta (Reuters) Ч LUKoil is buying Toronto-listed Bitech Petroleum Corp. in a $80 million recommended cash offer.

The companies said in a joint statement that the offer, at 1.55 Canadian dollars per share, was at a 99 percent premium to BitechТs Monday closing price of 78 Canadian cents.

LUKoil said it would use existing cash resources to buy Bitech, a Canadian oil exploration and production company with operations mainly in the republic of Komi.

LUKoil president Vagit Alekperov said in the statement the acquisition matched his companyТs strategy of consolidating its position in several core operating regions within Russia, while expanding internationally into North Africa and the Middle East.

Bitech also has production or exploration licenses in Egypt, Morocco, Tunisia and Colombia. Its stock, halted pending the announcement, rose 73 Canadian cents to a 12-month high of 1.51 Canadian dollars after the offer.

S&P Up on Insurance

LONDON (Reuters) Ч Standard & PoorТs said Wednesday that the use of credit ratings in the Russian insurance market looks set for steady growth over the next five to 10 years.

The announcement follows an expectation that the market will open to western insurers following German-owned AllianzТs decision last month to take a 45 percent stake in Rosno.

"Demand for ratings will grow in line with the regionТs insurance market, which to date has been slowed by a lack of liberalization. AllianzТs move might prompt others to court the market to avoid being left behind," said S&P associate Ashley Gill.

"If foreign insurers succeed in opening the market, the potential rewards are great. The average Russian spent $25 on insurance in 1999, compared with $117 in Poland. In contrast to a European Union average of $1,800, there is huge potential for growth, with the Russian market potentially worth more than 200 billion euros ($170 billion) if insurance spending levels reach those of Western Europe," Gill said.

Free Trade Zone

MOSCOW (MT) Ч Russia and Vietnam plan to create a free trade zone to boost bilateral economic cooperation, Deputy Prime Minister Viktor Khristenko told reporters Wednesday.

Khristenko said after a session of a bilateral intergovernmental commission co-chaired by Vietnamese Deputy Prime Minister Nguyen Manh Cam that Vietnam would submit its proposals by Oct. 1, Prime-Tass reported.

Khristenko said, however, that the creation of such a zone would demand consultations with the Eurasian economic community.

Russian-Vietnamese trade turnover doubled in the first five months of the year and is likely to hit $500 million by the end of the year. Prime-Tass quoted Khristenko as saying this figure "was very insufficient for the existing potential of bilateral relations."

He added that shuttle-traders bring $1 billion worth of goods in from Vietnam each year.

Yugoslav Debt Delay

MOSCOW (AP) Ч The government offered Yugoslavia to delay payment of $95.1 million natural gas debt for 1999-2000 and work out guidelines on gas debt regulation by Dec. 31, a news report said Wednesday.

Russia already allowed Yugoslavia to delay some $260 million in gas payments until Jan. 1, 2002, Interfax said.

Gazprom as well as the economics, finance and other ministries of both countries will work out the debt regulation.

A Cabinet spokesman was not available for comment. Gazprom also declined to comment.

Former Yugoslav President Slobodan Milosevic signed a pact with Gazprom in 1999 on supplies of 7.3 million cubic meters of gas a day to Yugoslavia, whose power grid and oil refineries were damaged by NATO bombings that Russia strongly opposed.

Bond Issue Earns $33M

MOSCOW (MT) Ч Bashkreditbank raised almost 1 billion rubles ($33 million) in 16-month ruble bonds with a yield to maturity of 19.96 percent in a placement that ended Wednesday.

The bond has four-month put option written into the prospectus, which under Russian law makes the offer irrevocable, according to Renaissance Capital, which arranged the placement. The yield to first put is 19.98 percent.

"It was one of the first bond issues in Russia where the price and the YTM were determined through an auction," said Alexander Merzlenko, a vice president in investment banking at Renaissance Capital. An auction to determine price and YTM was held July 11.

"Despite the current volatility on the financial markets, the bank managed to attract substantial funds and enter into the ruble-denominated bond market, which is strategically important for us," said Andrei Prin, vice president and chief treasurer of Bashkreditbank.

Avtobank, Bank Zenit and Akkord-Invest acted as co-lead managers on the placement.

"The results of the initial placement showed that the Russian corporate bond market is developing along the lines of other international markets," said Richard Olphert, head of investment banking at Renaissance Capital.