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Russia has raised $5.5bn (4bn euros; £3.5bn) in its first international debt sale since it defaulted in 1998, the British Broadcasting Corporation reported on Thursday.

Initial reports said that demand for the Eurobond was five times over-subscribed despite investors' growing caution about government fund-raising.

The Eurobond was split between a $2bn issue repayable in five years, and $3.5bn in ten years.

'The placement is rather a success,' said an analyst at Renaissance Capital in Moscow, Mr. Nikolay Podguzov.

Reports said that the five-year tranche was priced at 125 percentage points above United States Treasury bonds, and the 10-year tranche priced at 135 points above.

Final pricing is expected later on Thursday, and it is possible that Russia could raise more than $5.5bn.

Demand for the Eurobond was high as some investors believe economic growth in Russia could now be stronger than elsewhere in Europe and the US.

Russian Finance Minister, Mr. Alexei Kudrin has said that the growth of the country's total economic output, as measured by gross domestic product, might reach four per cent this year, more than the initial official forecast of 3.1 per cent.

The success of the fund-raising is seen as another step towards re-building investors' confidence in Russia since it defaulted on $40bn of debts 12 years ago.

Moody's, the ratings agency, rates Russia's debt Baa1, three levels above non-investment-grade.

Standard & Poor's ranks the country one level lower than Moody's, at triple-B, though still potentially attractive to some professional investors.