Foreign investors are once again lending to Russian companies.
Foreign investors are once again lending to Russian companies.
There appeared first signs of significant foreign investment into the Russian capital markets, since the start of the sanctions and being in international isolation a year. New deals appear in the segment of foreign syndicated loans actually closed to Russian borrowers last year. And it is not only the fact that instead of Western banks Russian companies borrow from a pooling of Chinese banks. For European lenders Russian rates are now so attractive that they are willing to compete for some Russian borrowers with their colleagues from China.
Foreign investors have begun to look with interest for the provision of syndicated loans to Russian business, a few interlocutors of "the Kommersant" on the banking market inform. "Beginning in the autumn of last year foreign investors sought to minimize their risk to Russian borrowers simply refusing to participate in syndicated loans", - the head of Nordea Bank, Igor Bulantsev recalls. Now, in calmer geopolitical conditions than last year, they gradually begin changing priorities and participating more actively in the transactions of syndicated loans, he adds. "The recovery in lending to Russian companies issue is really noticeable, it was two or three weeks ago", - the head of Rosbank, Dmitriy Olyunin confirmed.
In Q1, as in the end of last year, it was mainly the long-planned attraction. In December agrochemical holding "Akron" borrowed $ 525 million from a consortium of Western and Russian banks for five years to refinance the loan raised in April last year. In Q2 there have been new deal, and in larger quantities, and conditions on them were significantly better than three months ago, the head of the investment banking operations of Raiffeisenbank Oleg Gordienko informs.
External market of syndicated lending was in fact closed for Russian borrowers in 2014 after the introduction and strengthening of the sanctions. "The Kommersant" wrote many times that many Western banks did not directly refuse transactions, as potential Russian borrowers were not under sanctions, but in every way delayed the negotiations, tightened the credit conditions, i.e. demonstrated lack of interest in providing loan funds to the Russian side. In October 2014 the Bank of Russia even expressed the need to support the development of domestic legislation syndicated loan market - in the absence of external loans.
The emerging thaw in the market of foreign loans attracted by the banking pool was largely provided by the Chinese players. So, in early June, it became known that "Uralkaliy" was able to increase the amount of previously attracted from eight international banks syndicated loan worth $ 530 million (for four years under LIBOR + 3.30%) by another $ 100 million due to the Bank of China. In addition, according to "the Kommersant", several Chinese banks may provide "Metalloinvest" more than $ 200 million through the planned syndicated loan. On June 2nd the company announced taking € 267 million from the club of international banks. Chinese banks also show interest in participating in other planned syndicated loans, in particular for NLMK, Taif and "EuroChem". "The syndicated loan is considered as a possible option for financing, plans to attract are in the range of $ 300-400 million, - the NLMK states. - We are observing considerable interest from banks, including Chinese, in participating in structural loans".
"Among foreign investors, with which now the conditions of the syndicate company TAIF are being discussed, there are Chinese banks", - Oleg Gordienko confirmed (Raiffeisenbank is the organizer of attraction). "Evrokhim" did not respond on request of "the Kommersant" yesterday, "Metalloinvest" declined to comment.
But the thaw in the market is not only due to the declared re-orientation of Russian economic activity from the West to Asia-Pacific region. If this was so, then the Chinese banks would rigidly dictate their price terms of loans, and interest rates on the new syndicated loans would be prohibitively high.
Meanwhile, the rates are falling. "According to the new high-quality borrowers margin transactions are now an average of 0.5 p. p. less than if the transaction was closed three months ago", - Igor Bulantsev stated. If the borrower is asking lenders to waive the right of early requirements, though margin on such loans is reviewed in a big way, the new rates on them are lower than would have been at the end of last year and beginning of this, an average of 0.5 p. p., he adds. NLMK confirmed the trend of improving the syndicated loan market, including the price parameters, giving up more detailed comments.
Interest rates on loans are reduced because the Chinese banks are now competing for the quality of Russian borrowers not only with each other but also with European banks, the experts state. For banks, the realities of living in near-zero European rates, Russian profitability of lending is now more important than geopolitical risks. "In the Russian market we are still talking about quality borrowers with low risk, and the yield on loans to them is comparable to the yield on emerging markets due to geopolitical reasons, the foreign investors have again started to increase risk appetite for Russia", - Mr. Gordienko states.
The trend is also observed in the market of the public debt. "We see a significant reduction in interest rates on corporate and sovereign Eurobonds and rouble compared with the end of last year", - the head of the analytical department of the "Zenith" bank Kirill Sychev states.
Thus, forecasts of the experts, interviewed by "the Kommersant" last autumn (see "the Kommersant" dated November 10, 2014) are justified: at the first signs of stabilization of the situation, high Russian rates become more important for foreign investors than political risk.
http://www.kommersant.ru/doc/2740551
Translated by Mikhail Barkov.
