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Best corporate borrower - Emerging Europe

Vimpelcom, Kyivstar

In the past year Russian mobile phone company Vimpelcom has successfully faced up to domestic and international pressures in its quest to finance fast growth. At home it encountered a tax attack from the government; internationally it suffered from the generalized emerging market volatility induced by US interest rate worries.

The company "had quite a difficult backdrop, but has still managed to tap the market effectively," says Richard Luddington, head of debt capital markets for CEEMEA at UBS.

Russia has one of the world's fastest-growing mobile phone markets, and Vimpelcom, the second-biggest provider after MTS, has been investing heavily to take advantage of that growth. Its subscriber base grew from 5.2 million in 2002 to 26.6 million in 2004.

That sort of expansion means the company has had large financing needs. However, conditions in the Eurobond market have not been easy.

In April 2004, for example, strong employment data from the US gave rise to market fears that interest rates would be raised steeply to counteract inflation. That led many US and European investors to pull money out of emerging markets and high-yield debt. The JPMorgan Russian corporate bond index lost about 10 points in two weeks.

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