The St Petersburg fund-raising programme has been mainly restricted to three- month zero coupon bonds, which on occasion have managed to creep up to nine or even 12 months, long-term by Russian standards. The yield, earlier this year, was over 200 per cent. That means that an investor put up 33 roubles and nine months later collected 100 in return. At those sort of rates, you wonder how St Petersburg can afford to regenerate anything. To get the measure of the market distrust that Mr Sobchak and friends are having to pay for, a two-year US government bond, stripped of its coupon, will yield about 5 per cent. The current rate for long UK gilts is under 8 per cent.
Things would be easier for St Petersburg's financiers if they were borrowing into a rip-roaring inflationary boom, reducing the real value of their repayment burden. But nothing is that simple, for the rouble continues to be loosely pegged to the dollar, hovering around the 4,700 mark. If the peg continues, then an international investor buying into the 18- to 24-month bonds, with which St Petersburg is hoping to entice some City attention, will make an astonishing killing. But will the rouble peg continue, or will the plug be pulled? Clearly not one for widows and orphans.