OREANDA-NEWS. January 30, 2009. The state could decide to buy from investors distressed corporate bonds that experienced default for objective reasons rather than fraud, head of the Federal Securities Service Vladimir Milovidov said. “If the state takes such a step – to redeem default bonds -, it will do so only after the reasons for default have been clearly assessed. Bond redemption is a possible scenario if default was due to some objective reason, and was not simply the result of some kind of abuse” – Milovidov said Thursday.

“Bond redemption should not condone actions that resulted in the law being violated and people pocketing money (earned from bonds) and then later refusing to pay yields on them, with the state stepping in to buy up all these bonds. That’s not the way it should be”. For the record, the global financial crisis that closed debt markets for second-tier and greenfield issuers sparked a wave of defaults on the Russian bond market that has already reached 86 since the end of 2007.