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Russian firms face higher rates, delays
Russian companies face higher interest rates and delays on billions of dollars of loans as the crisis in Ukraine makes foreign banks increasingly wary of lending to them. The uncertainty sparked by Russia’s military intervention in its neighbour may have implications for nearly 20 high-profile corporate loans in the pipeline. At least one investment bank has already pulled out of its commitment to a loan for a Russian bank that is in syndication, senior bankers said. Bankers also expect margins on deals to increase, as the crisis is likely to reverse the downward pricing trend for Russian borrowers. “This will definitely affect Russian [loan] pricing as the risk is now considerably different,” a senior banker said. Talks are ongoing over five new Russian loans totalling up to US$5.5bn, including a US$2bn three-year facility for VimpelCom, Russia’s third-biggest mobile operator, which is seeking to refinance existing debt and increase working capital. Other firms seeking loans of up to US$1bn include petrochemical companySibur and Russia’s largest iron ore producer, Metalloinvest, while the world’s largest potash producer, Uralkali, is in talks for a US$500m refinancing. Uralkali’s proposed deal would be its first unsecured loan – an indication of the extent of liquidity and appetite for Russian risk before the crisis began. “The main knock-on effect will be pricing: it will not stay where it is,” a second banker said. Talks over a potential US$1bn loan for Novolipetsk Steel (NLMK) are at an early stage and may, therefore, be most affected by the crisis. “NLMK is the cheapest loan under discussion at the moment and there has already been haggling around the pricing,” said a third banker. “No banks have been mandated and discussions are still in an early stage so it will be interesting to see where it ends up now.” Negotiations also started last month on a possible multi-billion dollar acquisition financing for a top Russian company, a fourth banker said. “Quite frankly, we are very likely to be told to stop if the political situation escalates. It is a shame really as it looks as if it there would be some nice activity in Russia this year”
All of these loans could be delayed, as banks assess the potential impact of the developing crisis. “Quite frankly, we are very likely to be told to stop if the political situation escalates. It is a shame really as it looks as if it there would be some nice activity in Russia this year,” the second banker said. Bridge end?Bridge loans to bond issues for acquisitions by Russian companies may also be off the table, or at least more expensive, as the current volatility means banks are less able to count on the bond market. Arranging banks have been pitching(stampfen) aggressively to Russian companies this year. Oil giant Rosneft made two substantial repayments on jumbo bridge loans which freed up country limits for lenders. European banks that withdrew from Russia in the last five years in order to refocus on domestic lending have been returning to lend to Russian companies in recent months and the increased competition for mandates had put downward pressure on pricing.
http://www.ifrasia.com/...s-face-higher-rates-delays/21134940.article
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