Updated August 12, 2008

The volume of bill debts accelerates in Russia.

In 1H 2008 the number of the placed public bill programs exceeded the index of the analogical period of the last year by 73%. In the meantime, experts warn issuers and investors of risks' rise.

According to the research results done by the news agency Cbonds, for 1H 2008 the volume of the placed public bill programs has almost doubled as compared to 1H 2007.

Such growth is predetermined by the active bills' use to conduct offe rs on bond issues, as analysts state.

During the first half-year, the majority of companies that didn't have other sources of a financing were forced to issue bills in order to settle with bonds' owners. As per experts' calculations, issuers received about 60-80% of the bonds' issues volume.

Despite such scheme's popularity, the majority of experts agree that facilities' attraction for a settlement with bonds' owners via the bill issues is a quite risky affair both for the issuers and for the investors. "Bill is a risky instrument and its issue is not fixed at all: bills are stolen, they are issued with a deficiency in forms, they are not repaid in time, and these securities are often lost", head of the Federal Financial Markets Service (FFMS) department for regulation and control over collective investments Alex ander Bezkrovny explained. "If there is bonds' default, it is not clear, how these bills will be repaid", FFMS expert Tatyana Medvedeva agrees.

It is better to mark that since May several cases of technical defaults have already taken place on the debt market.

In mid-June Minnesco Novosibirsk, the woodworking company, reported that it could not pay a 500 million loan off.

Then, the perfumery chain Arbat Prestige did not pay bonds off in time of RUR 1,5 billion volume.

And after a couple of days, Gotek Company, the manufacturer of boxes from corrugated cardboard, and the Moscow regional investment trust company declared about the analogical problems. And if the latter companies have managed to cope with the technical default and pay off the loans, Minnesco Novosibirsk has faced the real default.

Moreover, in early August, Marta Holding (owns Billa and Grossmart supermarkets& #039; chains) reported about the second technical default since the beginning of the year. The holding that only in May had hardly repaid its bonds of RUR 1 billion, reported about the impossibility to settle a loan obligation of RUR

155,42 million because of the dire financial situation.

The company had to close 30 stores from 199 located in Russia' s citie

s and towns. Marta Holding doesn't eliminate the fur

ther closing of its supermarkets.

Hereupon, Dergava Company has declared about the difficulties of repaying its bond loans. Nizhny Novgorod's agricultural producer couldn' t se ttle the offers of about RUR 200 million.