Each certificate will entitle holders to one-tenth of a square meter of housing in new flats being constructed in the Moscow suburbs, Alla Kashonkina, one of the city officials in charge of the project, told Reuters.
Once they collect enough certificates, investors may convert them into a flat or use the paper as a short-term hedge against inflation.
Only Muscovites, or Russian energy workers and residents of the northern regions, will be allowed to participate in the issue, which starts Jan. 1. Foreigners will not be able to buy or sell the certificates.
The city hopes to sell certificates for the equivalent of 100,000 square meters of housing in 1995 and another 100,000 square meters in 1996, Kashonkina said.
The certificates will be sold through the commercial bank Inkombank and initially cost around 2 million rubles ($580) for each one-tenth of a square meter of housing.
Kashonkina said the paper would trade actively, although neither Russia's fledgling securities market nor its scanty capital markets laws are yet up to such innovative capitalism. It was not clear how a pricing and trading mechanism would be developed for secondary market trading.
Kashonkina could not say whether all apartments would be available in time but said some of them had already been built.
Several Russian issuers have tried innovative ways of raising money as a hedge against the sharp depreciation of the ruble. These include schemes linking borrowings to the value of output such as commodities. A recent issue by Avtovaz, the maker of Lada cars, sold bonds convertible into cars. Several Russian municipalities are also looking at issuing municipal bonds to fill their empty coffers.
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