UniCredit Bank provides its clients with services involving transactions on the securities market. UniCredit Bank is an active bidder at Russian exchanges like the Moscow Inter-Bank Currency Exchange (MICEX), the St. Petersburg Currency Exchange as well as on the OTC market. On behalf of its clients, UniCredit Bank concludes transactions involving government securities in both rubles (GKO, OFZ) and foreign currency (OVGVZ, Eurobonds of the Russian Federation), regional, municipal and bonds issued by Russian enterprises.
Types of Securities
Government Bonds Denominated in Rubles
- Government short-term zero coupon bonds (GKO) with maturity of up to 12 months
- Federal issue bonds with floating coupon yield (OFZ-PK) with maturity ranging from 1 to 5 years. Coupons are redeemed 2 or 4 times a year
- Federal issue bonds with fixed coupon yield (OFZ-PD) with maturity ranging from 1 to 30 years. Coupons are redeemed once a year
- Federal issue bonds with fixed yield (ÎFZ-FD) with maturity of over 4 years. Coupons are redeemed 4 times a year
- These bonds are issued by the Finance Ministry of the Russian Federation. The nominal par of each bond is 1000 rubles. All bonds are traded at the MICEX.
Government Bonds Denominated in Foreign Currency
- Bonds of the internal government
foreign currency bond issue (OVGVZ).
These are government securities issued by the Finance Ministry of the Russian Federation to restructure the liabilities of the USSR Vneshekonombank to Russia-based legal entities on their blocked foreign currency accounts. Any liabilities of Russian residents arising during bond circulation are paid in foreign currency without the necessity of obtaining a special license from the Bank of Russia - Eurobonds of the Russian
Federation.
External government bond issues (Eurobonds) of the Russian Federation are government securities and issued for the partial funding of the federal budget deficit. Bonds are issued in U.S. dollars, German marks and Italian lira with maturities ranging from 5 to 30 years.
At present, Eurobonds are an effective mechanism on the stock market. Interest in Russian Eurobonds is primarily due to their high coupon yield: from 5% tî 12.75% p.a. paid out half yearly. The estimated turnover for these securities on the OTC market stands at U.S. $200—300 million a day. Thus, the liquidity of Eurobonds is fairly high, and they may be recommended both for strategic investment portfolios and for the trading portfolio.
Since May 2002, trading in Eurobonds of the Russian Federation has been held at the Moscow Inter-bank Currency Exchange. The minimum lot is equal to $1000 at par. The circulation of Eurobonds in an organized market enables Russian investors to purchase these securities through authorized banks that provide brokerage services at the exchange without obtaining any special permit from the Bank of Russia.
UniCredit Bank is an active bidder and market maker at the inter-bank bond market. UniCredit Bank is one of the authorized banks — market makers that trade in Eurobonds at the MICEX
Russian Debentures
By the end of March 2002 there were some 70 issuers in the Russian debentures market. For the most part these are AA-rated issuers seeking to create a public credit history. Regulatory functions to protect investors are performed by the Federal Securities and Exchange Commission. Bidding in this market comprised of the top enterprises in key branches of the economy helps diversify the risk involved in securities investment.