From Bloomberg:
Latvia, which wants to join the euro region next year, will become increasingly attractive for Russians seeking to redirect investments from crisis-struck Cyprus, according to pan-Baltic investment bank Trigon Capital.
“Latvia is in infinitely better macroeconomic shape than Cyprus and this will not be lost on Russians looking for safe places to deposit capital,” Joakim Helenius, executive chairman at the Tallinn, Estonia-based company, which has about $1 billion under management, said yesterday in an interview. “Upon joining the euro, Latvia will be a part of the ‘hard bloc’ of euro members rather than a Mediterranean problem case.”
European officials from Brussels to Moscow are involved in talks to agree on a bailout for the Mediterranean island nation after its parliament rejected a levy on bank accounts. Russian companies and individuals have an estimated $31 billion of wealth in Cyprus, according to Moody’s Investors Service. Non- resident deposits in Latvia, mainly from neighboring Russia, make up about $10 billion, or half of the country’s total.
The former Soviet republic exited a 7.5 billion-euro ($9.7 billion) International Monetary Fund-led bailout last year, helped by the fastest economic expansion in the 27-member European Union. Latvia meets all conditions for the Jan. 1, 2014 switch, which would make it the 18th euro member after Estonia joined in 2011, Prime Minister Valdis Dombrovskis said last month.
Yield Plunge
The yield on Latvian government bonds due 2018 was little changed at 1.93 percent at 5:40 p.m. in Riga, compared with 4.14 percent a year ago. Five-year credit-default swaps were one basis point lower at 116, compared with 108 basis points for neighboring Lithuania, which plans to join the euro in 2015....MORE
