Beware the Russian bear

The tables have turned on the Russian debt markets. After a splurge of corporate issuance in the last three years, the latter half of this year has proven a tough time for the country's financial markets. Falling oil prices, the Georgian conflict, political instability and a saturation of credit from the state-owned companies - all these factors have resulted in a major exodus of investors from the country. So what hope for the future? By Sarfraz Thind

The Russian financial markets have not had a good third quarter. A 38% decline in the domestic equity market since early August, allied with a blowout in Russian corporate debt and credit default swap spreads saw a massive withdrawal of money by foreign investors in August and September. The country's foreign reserve figures for August show a $16 billion decline in reserves for the first half of the month. This was followed by a $5 billion decline in the early September figure.

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