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. Last Updated: 07/27/2016

Creditors Make Plea to Moody's

A group of holders of Soviet-era commercial debt said Tuesday they had asked Moody's Investors Service to delay a ratings upgrade until the state makes good on a promise to swap the debt.

The $6 billion of debt was taken out by Soviet companies without government guarantees. The government has been promising to swap the debt for Eurobonds since last year.

The last deadline was set for September, but government sources say a legal hitch prevented Prime Minister Mikhail Kasyanov from signing a resolution ordering the swap to go ahead.

The Emerging Markets Credit Association, which includes Morgan Stanley Dean Witter Investment Management and HBK Investments, said in a letter to Moody's that the successful conclusion of the exchange would mark an important step in the evolution of Russia's credit quality.

"We think the ultimate disposition of the FTO [foreign trade organizations] debt is a particularly important indicator, to the degree that a decision one way or the other on whether to act on the positive credit watch ought to wait the short time until that indicator is available," the letter said.

The association says it holds several hundred million dollars' worth of FTO debt.

Moody's said Oct. 17 it had put Russia's foreign currency ceilings for bonds, currently at Ba3, and bank deposits, now at B1, under review for a possible upgrade.