These Guys Don’t Miss A Trick

This morning Bloomberg are reporting that:

Russia’s central bank may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the bank’s first deputy chairman, Alexei Ulyukayev, said in Moscow today. His comments were confirmed by a bank official who declined to be named, citing bank policy. Finance Minister Alexei Kudrin said last month that Russia planned to buy $10 billion of IMF bonds using money from its foreign reserves.

And then I recalled about a week ago reading this:

Russian Agricultural Bank, the state- owned lender to the farming industry, plans to sell dollar bonds in the first offering by a Russian lender to foreign investors this year. The issue by Rosselkhozbank, as the Moscow-based lender is also known, follows OAO Gazprom’s $2.25 billion sale in April, Russia’s only other dollar bond deal of 2009, according to data compiled by Bloomberg. Rosselkhozbank hasn’t set the maturity of its notes, according to a banker involved in the transaction, who declined to be identified before the deal is completed.

Rosselkhozbank hired Barclays Capital and Citigroup Inc. to organize the sale, said the banker. The lender is rated Baa1 by Moody’s Investors Service, the third-lowest investment-grade ranking, and one level lower at BBB by Fitch Ratings. Vnesheconombank, the nation’s state development bank, is planning a $2 billion sale of one-year notes tomorrow that will be privately placed with Russian commercial lenders and the central bank. The sale of 10-year notes by Gazprom, Russia’s gas export monopoly, was the country’s biggest-ever corporate bond offering and the first in dollars since July, Bloomberg data show.

So, if I understand things aright, you first borrow a lot of money in a given currency, and then you wind up a discourse which forces the currency you have borrowed the mony in on an ever downward path. I guess this is what they call “win-win” in Moscow.

Treasuries fell, pushing 10-year yields to the highest level since November, as the government prepared to sell $19 billion in the securities and Russia said it may switch some of its reserves from U.S. debt. Ten-year notes extended earlier losses after the first deputy chairman of Russia’s central bank said the nation may buy International Monetary Fund bonds. Today’s auction is the second of three sales this week that will raise $65 billion as part of the government’s record borrowing program.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

4 thoughts on “These Guys Don’t Miss A Trick

  1. With a government strategy of huge deficits followed by dollar devaluations that matches USA debt to its capacity to pay every country with large surpluses wants to be elsewhere when the dollar really tanks. ‘Nobody wants to know you when your down and out’. Some one takes your pants as you lie prone. Someone else has his eye on your shirt. I thought all Americans subscribers to ‘Social Darwinism’. Isn’t that why you loved John Wayne?

  2. Well, if USA is willing to trash it’s currency and lets everyone know about it, it would be stupid not to use this opportunity. Why do you think it’s ok to let Chinese with all these worthless green paper, and it’s not ok to short USD? I think it’s fair. It’s time for the US to play by common rules.

  3. Pingback: Links: 2009-06-11 - Credit Writedowns

  4. Pingback: Meltdowns, pandemics and talking books

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