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. Last Updated: 07/27/2016

Traders: Russia Paid $5Bln Early

LONDON -- Russia has smoothed out a $5 billion spike in debt-servicing payments due in 2003, paving the way for a possible new debt issue, traders said Tuesday.

The country bought back foreign debt and repaid loans early to lower the $19 billion bill it faced in 2003 to around $14 billion, traders said.

Although debt prices have risen recently, analysts described the use of Russia's higher-than-expected oil and tax revenues to bring payments down to 2001 and 2002 levels as "astute."

"From the government's point of view, it's a very smart move," said Zsolt Papp, emerging markets analyst at ABN Amro in London.

Charles Movit, Russia economist at Washington-based consultancy PlanEcon, said: "When they have plenty of cash, it's easy to reassure people that domestic obligations can be met."

The move to smooth the payments focused on a tranche of domestic dollar-denominated debt known as MinFin-4, a government five-year bond, and a loan from the International Monetary Fund, all due for repayment in 2003.

"We understand from various sources that the government has prepaid a large chunk of MinFin-4," said Sergei Voloboyev, emerging markets economist at Credit Suisse First Boston.

"Probably half of MinFin-4 has effectively been bought back, and the [five-year bond] problem is effectively resolved," he said, adding that around $2.8 billion had also been repaid to the IMF, most of which was due in 2003.