Russia may issue convertible bonds to sell state assets in 2011

MOSCOW. November 2. KAZINFORM The Russian government may sell stakes in state-owned companies in 2011 by issuing low-yield bonds convertible into the shares of businesses slated for privatization next year, Kommersant business daily reported on Tuesday.; Kazinform refers to RIA Novosti.

The measure would help the government get up to 20 percent of revenues from privatization in 2011-2013, the paper said, quoting sources in the Economic Development Ministry and the government.

Investment Bank Credit Suisse approached the ministry with this proposal in October, sources told the paper, adding that presidential aide Arkady Dvorkovich, and the Finance and Economic Development Ministries held talks on that issue in October-November.

The government last discussed the possibility of placing exchangeable bonds in 2002-2003. Five-year exchangeable bonds were considered as a way to privatize 10-20 percent of VTB's shares, following negotiations between Jean Lemierre, President of the European Bank for Reconstruction and Development (ERBD) and VTB, the country's second biggest lender, on investing up to $300 million in VTB's capital.

The deal did not go through as the Russian government decided to privatize the bank in the usual way.

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