This will most likely force Russian borrowers to make adjustments to their plans for placing their securities on foreign markets. The first to do so was Alfa Bank . As reported by ITAR-TASS, the bank's president Petr Aven said yesterday in New York that the bank had decided to postpone the issue of $150 million in Eurobonds and the attraction of $100 million in loans planned for the second quarter of 2001. Aven added that the issue of Eurobonds is possible later next year. He named the banking crisis in Turkey as one of the reasons for the aggravation of the borrowing situation.

The worsening situation in developing markets is forcing Russian companies to reconsider their plans to enter the external borrowing market. Yet just a few months ago, Russian issuers, including the state, planned to resume attracting funds from international investors in 2001.

In recent months, investors have been watching with bated breath as waves of crisis roll over developing countries. Argentina, Turkey - who's next? Added to this are Russia's own problems. These are, first and foremost, delays in negotiations with the IMF and the Paris Club. As a result, rates on Russian securities, which had begun to decline in the summer, have returned to levels at which borrowing is ruinous - the yield on 30-year Eurobonds has exceeded 17% per annum.

Other companies have not yet made statements about changing the timing of the issue of securities. The press service of YUKOS, which is planning to issue Eurobonds next year, reported that there is no information about changing plans. Vice President of TNK Oleg Surkov said that the company "is carrying out all the procedures laid out in the plan," which provides for the issue of Eurobonds in the middle of next year. "If a favorable situation develops, we will issue them at any time," says Surkov.

But the fate of the issuers does not depend only on them. Experts believe that until the main borrower - the state - enters the international market, the issue of debt obligations by others is impossible. Meanwhile, the question of whether the Ministry of Finance will be able to enter the market in 2001 remains open.

It was previously assumed that Russia would enter the market to refinance the bond issue maturing in November 2001. But with the current rate level - from 15% to 20% - the government will not borrow, and there are no reasons for lowering the interest rate yet. On the contrary, if the crisis in Argentina worsens, the situation may worsen.

"Rates on the market are ruinous now," says Andrey Cherepanov, head of the Finance Ministry's external debt management department. "Yields on Russian securities should at least reach the average level among developing markets. Russia should achieve this by servicing its debt."

Goldman Sachs analyst Al Breach believes that some short-term borrowing could be done before that repayment, but it would only hurt the market because it could create the impression that Russia has debt servicing problems.

In addition, Russia may simply not need external borrowing. "We need to see whether borrowing will be necessary," says Cherepanov. Perhaps only to clear the way for companies.

Russian borrowers will have to wait