Russia buys $3 billion worth Ukrainian bonds

MOSCOW - Russia has bought $3 billion worth of Ukrainian bonds in a bid to support its neighbor's economy, Prime Minister Dmitry Medvedev said yesterday.

Ukrainian President Viktor Yanukovych has faced daily protests against his surprise decision last month to drop a landmark deal with the European Union. Last week, Yanukovych secured a deal with his counterpart Vladmir Putin whereby Russia slashes gas prices for Ukraine and buys $15 billion worth of Ukrainian government bonds.

The opposition says the agreements are a sell-out but Ukraine's Prime Minister Mykola Azarov said Russia's bond purchase has helped pull Ukraine from the financial abyss.

Medvedev met with Azarov in Moscow on yesterday and announced that Russia bought the first batch of bonds worth $3 billion on Monday. He did not indicate, however, when Russia was going to buy more Ukrainian debt.

Investors have criticized Russia's decision to buy Ukraine's junk-rated debt and pointed to the fact that the Russian government is legally prohibited from investing state funds into risky assets.

In Kiev, Yanukovych defended his decision to ditch the EU deal, saying it "things would have ended badly" for the Ukrainian economy.

Meanwhile, opposition leaders continued to criticize Yanukovych for his dealings with Moscow, saying he will now use Putin's bailout to continue tightening the screws at home.

"The Kremlin has untied the hands of Yanukvoych, who is strengthening political repression in Ukraine," said opposition politician Oleksandr Turchynov.