The auction for setting interest rate of the first coupon for the first issue bonds of SISTEMA FINANCE JSC was held on the Moscow Interbank Foreign Currency Exchange (MIFCE) on November 5. SISTEMA FINANCE is a 100% -owned subsidiary of SISTEMA JSFC. Basing on results of the auction the emitter set the interest rate of the first six-monthly bond coupon at 17.75% per annum. According to Pavel Gurin, the chief of the investment and banking operation department at RAIFFEISENBANK AUSTRIA, the demand volume at the auction totaled 1,824 million rubles. Bids for interest rates ranged from 16.75% per annum to 20.05% per annum. All in all, there were 66 bids. During the auction 46 bids with the total volume of 1,200 million rubles were accepted. RAIFFEISENBANK AUSTRIA is the sponsor and paying agent of the bond loan. Under the emission terms the interest rate of the first six-monthly bond coupon was determined at the open auction held on MIFCE. The interest rate of the second six-monthly bond coupon is equal to the one of the first coupon. The interest rates of the third and fourth coupons are set at 15% per annum. The cosponsor of the bond loan and financial consultant is the Moscow Bank of Reconstruction and Development. The bond issue cosponsors are the Alfa Bank, All-Russian Bank of Regions’ Development, Guarantee Bank – Moscow, Zenith Bank, Ingosstrakh-Soyuz, Nikoil, Industrial and Construction Bank. The Federal Security Commission registered the issue of bonds with the nominal value of 1.2 billion rubles on October 9, 2002. SISTEMA JSFC furnished a guarantee of the bond issue. Proceeds from the bond loan flotation will be used for financing investment projects of SISTEMA JSFC. The bond turnover is to last two years. By the public irrevocable offer of SISTEMA JSFC published in the newspaper Vedomosty on October 23, 2002 investors may present bonds for an early redemption at the nominal value in 364 days after the flotation starting date.

ZAO RAIFFEISENBANK AUSTRIA, a subsidiary of the RAIFFEISEN international group, is placed 15th (as of July 1, 2002) among Russian banks by the volume of its assets and is one of the leaders in the Russian market of corporate bonds. In 2001 and 2002 the bank sponsored as well as cosponsored 12 issues of corporate bonds with the total nominal value of 15.7 billion rubles.

SISTEMA JSFC (www.sistema.ru) is one of Russia’s largest diversified holdings. It owns and manages over 200 enterprises in different business sectors, including telecommunications (MTS, MGTS, MTU-Inform, Telmos, Comstar and a number of other leading telecommunications companies), electronics (NIME, Mikron plant, etc.), insurance (ROSNO), radio engineering (The academician A.L. Mints radio technical institute, NPK NIDAR, etc.), real estate and construction (SISTEMA-HALS), oil and oil products (UIC NEDRA, FIC KEDR-M), retail (Detsky Mir trading house), finances and securities (MBRD JSCB), mass media (newspapers Rossia, Smena, Metro, Literaturnaya gazeta, Rosbalt agency, Maxima communication group), tourism (Intourist), sports (Olympiyskaya sistema), medicine (MTH medical technological holding). The market value of assets owned by SISTEMA JSFC is estimated at $3 billion.