THE MOSCOW TIMES


Dealers heavily over-subscribed a 400-billion ruble supplementary treasury bill issue Wednesday as yields fell significantly, indicating that the government's t-bill program was finally recovering from the ruble's "Black Tuesday" crash.


"The crisis is over for state treasury bills," said Alexei Dolgikh, a securities expert at Troika Dialog. "Sudden drops in prices are finished for now -- instead yields should gradually fall to the level of interest rates on the interbank lending market."


Dealers placed more than 600 billion rubles in bids for the issue, a supplementary tranche of six-month t-bills that will actually mature in about three months. The Finance Ministry sold 397.1 billion rubles worth of bills at an average annualized yield of 238.09 percent, well down from 293.48 percent at the last auction of three-month t-bills on Nov. 1.


The auction represented the first time since the ruble crashed 845 points on Oct. 11 that the government had managed to sell a full issue of either three-month or six-month bills.


Interest rates on three-month loans on the interbank market were about 150 percent this week, a wide enough difference from t-bill yields to encourage considerable speculation on the securities, according to experts.


"People were snapping up short-term credit on Monday and Tuesday to buy t-bills which they will turn around and sell in two weeks -- at a substantial profit," said Alexander Ivanishev, a securities expert at Grant Financial Center.


According to the Finance Ministry, Wednesday's issue was not a new three-month issue but a supplement to the sixth issue of 6-month t-bills on Aug. 9. Both issue and supplement share the same maturation date: 15 Feb. 1995.


"When they come due together, we will run an auction of only six month bills to lure short-term money into long-term obligations," explained Valentina Pryanishkovna, a state securities expert at the Ministry of Finance.


"In an ideal situation, all t-bills would be 6-month or one year instruments."


"We call this soft persuasion," said Vadim Yegorov, t-bill expert at the Moscow Interbank Currency Exchange where treasury bills are traded. "No harsh administrative measures or cancellation of 3-month t-bills, just a gradual shift towards longer term instruments."