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. Last Updated: 07/27/2016

State Plans $2Bln Debt Restructure

Russia on Tuesday said it would issue up to $2 billion worth of Eurobonds to swap for commercial loans as part of its efforts to restructure huge foreign debts inherited from the Soviet Union.

The loans are credits received by Soviet firms from foreign companies without Soviet state guarantees. The total claims at the outset were some $6 billion, but negotiations have so far reduced this to around $2 billion.

"The Finance Ministry of the Russian Federation is to carry out in the name of the Russian Federation an issue of foreign bonds ... with a total volume of no more than $2 billion with the aim of carrying out a restructuring of the verified debt," the government said in a statement signed by Prime Minister Mikhail Kasyanov. The statement was published on the government's web site, www.pravitelstvo.gov.ru.

It gave no time frame for the debt issue, but it is expected to be in March or April this year. The document said the principle and interest of the debt would be restructured into 2030 Eurobonds with a discount of 37.5 percent. Overdue interest will be restructured into 2010 Eurobonds with a 9.5 percent discount.

The Soviet-era commercial debt is part of Russia's total foreign debt of $156 billion, of which the Central Bank says about $65 billion is former Soviet debt.

This includes $33 billion owed to the London Club of private lenders, which was restructured for a second time after the 1998 economic crisis with a 36.5 percent discount.

The Paris Club of sovereign creditors is owed around $40 billion, which has been restructured once, in 1996.