Russia might buy $3 bln worth of 5% Ukrainian eurobonds by week's end - minister

Russia might buy $3 billion worth of two-year Ukrainian eurobonds by the end of this week, Russian Finance Minister Anton Siluanov told reporters on Tuesday.

"Since we have partnership relations, a decision was made to provide $15 billion in resources for this and next year. This year, there are plans to provide $3 billion in resources," Siluanov said.

The minister said the funds will be provided by "investing NWF money in Ukrainian government eurobonds, placed under English law on the Irish stock exchange; the coupon will be 5% per annum."

Siluanov said the bonds are to be placed this week already. "

He said the duration of the Ukrainian eurobonds will be two years, to the end of 2015.

He also said that this eurobond offering from Ukraine was not prepared especially for Russia. "This issue was planned in the budget, our Ukrainian colleagues intended to enter the market, so it was only necessary to lend a hand in time. I believe that we get a mutual benefit from increasing our cooperation ties," Siluanov said.

The minister said that $3 billion will enable Ukraine to tackle its budget and financial problems in 2013. "This year, $3 billion should completely solve the problem of the budget and the financial sector, therefore it's possible to say that next year and this year there will not be any financial shocks in Ukraine. This resource will make it possible to concisely ensure financial stabilization both for the budget and the financial market," Siluanov said.

Russia also plans to buy Ukrainian eurobonds in 2014 rather than provide government loans. Such purchases are expected to total $12 billion.

"We will use debt instruments, rather than intergovernmental agreements on providing budget loans. We are buying an instrument, issued under English law. This instrument is even more protected than just an intergovernmental loan," Siluanov said.

The duration of the eurobonds to be issued in 2014 is also expected to be until January 1, 2016.

"We now have a short investment, two-year. […] Next year will also be to the end of 2015. We believe that right now these resources will stabilize the situation in Ukraine's money sector, stabilize the situation with Ukraine's budget. We've lent support to the budget and financial market. I think that the turmoil should die down, Ukraine will have enough money and there might even be a flow from foreign currency into the national currency," Siluanov said.