By Denis Maternovsky, Caroline Hyde and Sonja Cheung April 19 (Bloomberg) -- Russia plans to offer five- and 10- year dollar bonds in its first international debt sale since the 1998 financial crisis, according to three bankers with knowledge of the transaction. Russian officials are meeting investors in Los Angeles today, San Francisco tomorrow and New York on April 21, after covering European and Asian cities last week. The government has said it plans to borrow as much as $17.8 billion abroad this year in several installments and is selling at a time when yields on emerging-market debt are near all-time lows on confidence in the economic recovery and record-low global interest rates. Officials, including Finance Minster Alexei Kudrin, have indicated the sale may be less than the official target for 2010 after a surge in commodity prices boosted the economy. “The five-year maturity will cater more to local Russian banks, while the 10-year is for international accounts,” said Vladimir Gersamia, senior portfolio manager at Fortis Investments, who helps manage $3 billion of emerging-market debt in London. “As long as the deal is between $5 billion and $7 billion it should do fine. I wish they could have done the 20- year maturity as well, but obviously they didn’t want to oversaturate the market.” Russia is coming back to international capital markets for the first time since defaulting on $40 billion of domestic debt in 1998. Yields have fallen by almost two-thirds from 12 percent in October 2008 as oil prices rebounded above $80 a barrel, spurring the economy’s recovery from its worst slump since the collapse of the Soviet Union in 1991. Bond Rally The country’s foreign-currency debt has returned 26 percent during the past year, beating the 24 percent gain for global emerging-market debt, according to JPMorgan’s EMBI+ Indexes. The rally helped increase assets under management in developing- nation debt mutual funds to a record $74.7 billion last month, according to research firm EPFR. Bonds, stocks and the ruble slumped today as oil, Russia’s main export, retreated below $82 a barrel. The U.S. Securities and Exchange Commission sued Goldman Sachs Group Inc. for fraud April 16, helping trigger a sell-off in commodities and global equity markets. Russia’s benchmark dollar bond due 2030 dropped, pushing the yield eight basis points higher, the biggest increase since March 24, to 4.852 percent by 2 p.m. in Moscow, according to Bloomberg prices. That’s up from a record low of 4.773 percent on April 16. Stocks had their steepest decline in more than two months, with the Micex Index losing as much as 2.9 percent. The ruble weakened the most since Feb. 4. Russia hired Barclays Capital, Citigroup Inc., Credit Suisse Group AG and VTB Capital on Feb. 5 to arrange the sale. The government’s debt is rated BBB by Standard & Poor’s, two levels above non-investment grade, and one step higher at Baa1 at Moody’s Investors Service. To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

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