Excess liquidity of the credit institution used to early extinguish its commitments and to buy up other people’s
Photo: RIA NOVOSTI/Maksim Blinov
Devaluation and sharp increase in rates in late 2014 are the reason that Russian banks within two years was able not only ahead of schedule to extinguish its external debt, but also to buy obligations of companies in foreign currency. And bought not only Eurobonds, but also loans. Such actions led to the fact that the total debt of Russian issuers with the I quarter 2014 I quarter of 2016 declined to $50 billion Such an assessment in macroeconomic overview of the results of the National rating Agency (“news” has reviewed the document prior to official publication).
At time period I quarter 2014 I quarter of 2016, according to statistics of the International Bank of settlements (IDB), the total external debt of Russian issuers decreased from $163 billion to $113 billion As noted in the review of the NDA, these achievements became possible thanks to activity of domestic credit institutions.
“In 2014-2015 the Russian banks actively extinguished its external debt, first on the schedule and then ahead of time. Then they began to buy entire foreign debt, is not repaid by the issuers that they could find in the market. And redeemed not only Eurobonds, but also loans”, the review says the NRA.
As a result, for two years, the total external debt of Russian issuers decreased by $50 billion, specifies Agency. Your conclusion about the influence of banks on the process analysts of the NRA do on the basis of balance of payments statistics. “We see that the banks repay their debts in excess of immediate liabilities and non-financial companies, on the contrary, underpaid vs graphics”, — emphasized in the review of the Agency.
According to the Director of the methodical Department of the NRA Maxim Vasina, the process became possible thanks to the presence of banks sufficient foreign exchange liquidity.
The reasons for its formation several. First, it is primarily foreign currency liquidity absorbed from the population during the crisis winter of 2014-2015. And we are not talking about the already accumulated resources, but also about those that people bought in a panic in the period of devaluation. Secondly, after a sharp and sudden increase in the key rate to 17% in December 2014, the promised returns on deposits in many credit institutions soared to 18-20%. Accordingly, it has attracted ruble liquidity, which the banks used for currency purchases. And also had a Foundation for it, as the decline in lending and the real sector during the crisis has led to a revolutionary situation, the old loans were returned and new ones issued. Where to invest? To purchase its own bonds at a price below the nominal value that was justified and appropriate, analysts say.
— The main objective why banks have bought up the debts — economic, — said Maxim Vasin. — Repurchase to maturity allows us to give substantial savings in debt service. The repayment of the debt denominated in foreign currency were made at a faster pace as banks feared a further rise in price due to the risk of devaluation.
However, as the expert believes, the public debt of the Russian issuers could be acquired by credit institutions, as was the opportunity to place foreign currency funds with low risk in the context of a sharp slowdown in lending.
— The result was a significant reduction in external debt of banks and corporations, denominated in foreign currency, and the foreign debt instead of domestic. In addition, there was partial refinancing of many companies in Russia, — said the representative of the NRA.
Largely we are talking about metallurgical and state-owned companies.
Russian companies had the opportunity to avoid currency risk and to borrow from Russian banks, — said Maxim Vasin.
Analyst GK ТeleTrade Michael Poddubsky explains the desire to repay their external debts and to buy other people and even the sanctions regime.
The reason for the gradual decline of the external debt is precisely the impossibility for the individual companies, which imposed sanctions, to refinance its debt — old debts are repaid and new ones issued in smaller volumes, — said the analyst.
In his view, these dynamics are likely to occur further to the lifting of sanctions. This year, however, this trend is not yet confirmed. In the first half of 2016, the total external debt of Russia, including liabilities General government Central Bank, banks and non-financial companies stopped declining and even rose slightly — to $3 billion to $521, 5 billion However, it still remains at a safe level below 40% of GDP, according to a survey of NRA.
Risks a sharp weakening of the national currency decreased, which makes buying your own debt is not so interesting, explains the change of trend analyst group of companies “Finam” Bogdan Zvarich.
— It’s likely to be talking about the systematic repayment of debt denominated in foreign currency, and the gradual replacement of its ruble. This will also contribute to the reduction of interest rates by the Central Bank that will lead to a decrease in the value of liabilities, he said.