BOFIT Weekly Review 2015/45
Russian firms borrow modestly
Russia’s troubled economy and financial market sanctions have contributed to a collapse this year in the issued volume of international corporate bonds and syndicated loans. Media reports estimate that the value of syndicated loans granted this year between January and September amounted to $2.7 billion, a 70 % drop from the same period in 2014.
Moreover, companies have been paying off existing eurobonds much faster than issuing new ones. In the first nine months of this year, only five eurobonds, totalling about $700 million, were issued. Bond issues in January-September 2013 and 2014 amounted to $47 billion and $10 billion, respectively. Gazprom and Norilsk Nickel last month held successful issues of one-billion-dollar eurobonds, suggesting international investors may be regaining some appetite for Russian debt.
Companies have not retreated from the domestic bond market. For January-September, nearly 1.5 trillion rubles ($25 billion) in debt securities were issued, i.e. slightly more than in the first three quarters of 2014. Large firms in the oil and gas sector dominate the market.
Corporate borrowing from domestic banks fell significantly on-year in the first nine months of 2015. As of end-September, the valuation of the corporate loan stock in rubles has risen by about 20 % over the previous twelve months (i.e. a few percentage points above the inflation rate). The lion’s share of growth came from the impact of ruble depreciation on the value of forex loans. Slowing growth in the loan stock and ruble depreciation have also increased the share of forex loans in the overall corporate loan stock. Some 45 % of the loan stock of the top ten corporate lenders were forex loans at the end of September. The share of forex loans in the total corporate loan stock was about 30 %.
Credit is granted mainly to large, wealthy firms. CBR data show that the loan stock of small and medium-sized firms has shrunk even in nominal terms during 2015. Lending is highly concentrated among big banks. The ten largest lenders account for about 75 % of the stock of corporate loans.