UnicodeEncodeError with default install on russian Windows

I have Bazaar-2.5.0 installed on a Windows machine with system locale set to Russian. By default Bazaar selects Russian language (ru_RU) for user interface. With such setup, branch checkout fails with traceback:

C:\>bzr co bzr+ssh://server/path
bzr: ERROR: exceptions.UnicodeEncodeError: 'ascii' codec can't encode characters
 in position 15-23: ordinal not in range(128)

Traceback (most recent call last):
  File "bzrlib\commands.pyo", line 920, in exception_to_return_code
  File "bzrlib\commands.pyo", line 1131, in run_bzr
  File "bzrlib\commands.pyo", line 673, in run_argv_aliases
  File "bzrlib\commands.pyo", line 695, in run
  File "bzrlib\cleanup.pyo", line 136, in run_simple
  File "bzrlib\cleanup.pyo", line 166, in _do_with_cleanups
  File "bzrlib\builtins.pyo", line 1636, in run
  File "bzrlib\branch.pyo", line 1491, in create_checkout
  File "bzrlib\bzrdir.pyo", line 910, in create_workingtree
  File "bzrlib\workingtree_4.pyo", line 1549, in initialize
  File "bzrlib\transform.pyo", line 2536, in build_tree
  File "bzrlib\transform.pyo", line 2652, in _build_tree
  File "bzrlib\transform.pyo", line 1734, in apply
  File "bzrlib\progress.pyo", line 116, in update
  File "bzrlib\ui\text.pyo", line 374, in _progress_updated
  File "bzrlib\ui\text.pyo", line 554, in show_progress
  File "bzrlib\ui\text.pyo", line 536, in _repaint
  File "bzrlib\ui\text.pyo", line 440, in _show_line
UnicodeEncodeError: 'ascii' codec can't encode characters in position 15-23: ordinal not in range(128)

bzr 2.5.0 on python 2.6.6 (Windows-7-6.1.7601-SP1)
arguments: ['C:\\Program Files\\Bazaar\\bzr.exe', 'co', 'bzr+ssh://server/path']
plugins: bzrtools[2.5.0], changelog_merge[2.5.0], colo[0.4.0],
    explorer[1.2.2], fastimport[0.14.0dev], git[0.6.7], launchpad[2.5.0],
    loom[2.3.0dev], netrc_credential_store[2.5.0], news_merge[2.5.0],
    pipeline[1.4.0], qbzr[0.22.1], rewrite[0.6.4dev], svn[1.2.1],
    upload[1.2.0dev], xmloutput[0.8.8]
encoding: 'cp1251', fsenc: 'mbcs', lang: None

The branch that I am trying to check out is completely empty, fresh created on the server with bzr init --no-tree.

When I set language = en in bazaar.conf, the same command passed successfully with no console output.