Russia is considering an offer to the Paris Club of creditor nations involving a swap of outstanding debt into bonds, a top Russian banker said on Thursday.
Vladimir Dmitriyev, chairman of Vneshekonombank, said Russia would prefer to issue eurobonds rather than use cash to pay down its $47.7 billion in bilateral sovereign debts mainly inherited from the Soviet Union.
"We want to offer the Paris Club and its separate members a debt restructuring, an issue of market instruments to replace the current bilateral debt obligations," Dmitriyev told reporters in Milan, Italy.
Vneshekonombank is responsible for servicing Russia's debts.
Russia is likely to offer higher interest rates on eurobonds to creditors like Germany and Italy. But analysts say such a swap makes sense only if Russia gets substantial relief on the loans.
The news depressed Russian eurobonds, which fell by around a point on concerns of increased market supply, before recovering.
The Russian finance ministry floated the idea of repaying or swapping the debts after Germany - its biggest sovereign creditor - issued 5 billion euros ($6.1 billion) in "Aries" credit-linked notes backed by Paris Club debts.
June's Aries offering was a huge hit on financial markets, but angered Moscow, which said it was not properly informed.
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