Gekko

PEOPLE who share my outlook on the Russian debt and equity markets were cheered by the feel-good press that burbled from Helsinki and assorted world capitals after the summit meeting last month. Not that we believed the summit spin-but you can’t be a seller unless there are some buyers around, and they need to be encouraged until they are relieved of their excess cash.

Some interesting numbers are coming out of the Russian markets these days. For example, it is believed that over 60 per cent of the internal debt of Russia is now held by foreigners. This is principally in the form of “gekkos” (sic) or Russian Treasury bills, formally known as GKOs. The Russians themselves don’t seem to want to buy them, preferring to hold onto their cache of $30 or $40 billion of U.S. currency. What, one wonders, do they know that the foreigners don’t? After all, you can earn fat double-digit returns in GKOs even after hedging out the currency risk. Could it be that the government is printing them like cents-off coupons to meet back-wage demands? Is that why interest rates in Russia are rising to what the brokers tell people are “attractive” levels?

JD

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John Dizard

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PEOPLE who share my outlook on the Russian debt and equity markets were cheered by the feel-good press that burbled from Helsinki and assorted world capitals after the summit meeting last month. Not that we believed the summit spin-but you can’t be a seller unless there are some buyers around, and they need to be encouraged until they are relieved of their excess cash.

Some interesting numbers are coming out of the Russian markets these days. For example, it is believed that over 60 per cent of the internal debt of Russia is now held by foreigners. This is principally in the form of “gekkos” (sic) or Russian Treasury bills, formally known as GKOs. The Russians themselves don’t seem to want to buy them, preferring to hold onto their cache of $30 or $40 billion of U.S. currency. What, one wonders, do they know that the foreigners don’t? After all, you can earn fat double-digit returns in GKOs even after hedging out the currency risk. Could it be that the government is printing them like cents-off coupons to meet back-wage demands? Is that why interest rates in Russia are rising to what the brokers tell people are “attractive” levels?