Bloomberg News
Friday, October 31, 2008

MOSCOW, Oct. 30 -- Russia's stock market surged Thursday as the government appeared to be implementing a $50 billion bailout to refinance debt owed by some tycoons.

Prime Minister Vladimir Putin and other members of the supervisory board of state development bank Vnesheconombank approved dispensing the first $10 billion. The bank declined to say which companies will get loans and under what terms.

The Vedomosti newspaper reported Thursday that billionaire Oleg Deripaska's Rusal will receive $4.5 billion to repay debt secured by its stake in Norilsk Nickel, the world's biggest producer of the metal, according to two bankers with knowledge of the deal. Also, Mikhail Fridman's Alfa Group will get $2 billion backed by its stake in VimpelCom, Russia's second-largest cellular company.

The Micex index rose 19 percent to 727.39. The index has increased 42 percent since Oct. 28, its biggest three-day gain on record.

Analysts said it was possible the stakes could eventually fall into state hands if the oligarchs cannot repay the loans. "We believe it is possible that neither Alfa nor Rusal will find fresh cash . . . and the state could eventually get the stakes in both Norilsk Nickel and VimpelCom," Julia Bushueva, strategist at UniCredit, wrote in a report.

VEB said it is offering loans for no more than one year at a rate at least 5 percentage points over the London interbank offered rate.