Russian bank pulls bond offer 'due to protests'

Russia's state development bank VEB shelved a bond offering at the last minute after investors took fright over the volatility caused by the Moscow protests, according to a report. The Kommersant daily said interest had initially been high in the $500-million (370-million-euro), five-year eurobond offer by Vnesheconombank (VEB). But investors were then spooked by a steep fall on the Moscow stock markets due to the protests. It said this was the first time since the turbulent 1990s -- when Russia defaulted on its debt and the economy almost went into meltdown -- that a political event had forced the cancellation of a Russian eurobond offer. The book building, indicating investor interest before the actual bids come, had been very strong, a banking source told the paper. "The book building was basically done but then investors decided not to take part due to the disturbances in Moscow," the source said. "Two hours before the start of taking bids for the offer, the book was already filled to a volume of $1 billion. But then after hearing about the turbulence on the markets, investors started to withdraw their bids." The Russian stock markets, which usually closely track US trends, fell sharply on Tuesday after the first demonstrations. The MICEX index dropped almost 4 percent and the RTS almost 5 percent. They extended the losses on Wednesday. Another source told the paper that foreign investors in particular had pulled out after hearing that US Secretary of State Hillary Clinton had vehemently criticised the conduct of the elections. The opposition, which insists the vote was rigged, have staged daily protests in Moscow since Monday and have vowed an even bigger rally at the weekend.