The market for financial institution borrowers in Russia will remain unwelcoming throughout 2009, even as their refinancing needs have piled up to about $22bn, loans bankers warned this week.
An estimated $12bn of international loans to Russian banks are set to mature next year, along with bonds worth about $12bn, according to the figures quoted by one banker at a Euromoney seminar on central and eastern European loans in Vienna on Wednesday.
But there are low expectations, even among Russian borrowers, that the funding needed to refinance this debt will be provided by the loan market, at least on a syndicated basis, while many predict that the market will remain shut for most borrowers.
"I doubt there will be a true market opportunity in the next few months," said one official at Russian bank, speaking at the conference in Vienna.
He highlighted that funding might instead come from bilateral loans, or by raising money domestically, but said that most Russian bank borrowers would have no option but to repay their loans, at least during the first quarter of 2009.
Some lenders were even more bearish about the prospects of getting deals away for Russian financial institutions until at least the end of next year.
"Some may not be willing to lend, but there will be many cases when people are not able to lend," said one banker speaking on a panel. "Until lenders’ own balance sheets are looking any better, they won’t be doing anything at all. And even when they do improve, their priority is not going to be to lend to Russian banks."
Officials from Russian financial institutions insisted, however, that although they may not access the loan or bond markets next year, it was not necessarily problematic for their funding programmes. One also insisted that repayments were manageable.
"Russian banks have never been very leveraged, and three quarters of our funding is customer funding," said one Russian banker, later adding that like western European banks, Russian financial institutions would have to shrink their balance sheets.
Most loans to Russian banks scheduled to come to market in the last six months were pulled or postponed, as market conditions globally became increasingly precarious and Russia experienced its own, even worse, bout of equity volatility.
Few new transactions are still being talked about, and even these are in danger of falling apart.
Bank of Moscow could be the last Russian financial institution to access the market this year if it manages to haul in the four or five lenders it needs to close its club deal. Commerzbank, JP Morgan, SMBC and WestLB — and possibly a fifth bank — are thought to be lining up to provide the funds, and the lenders are now going through the process of getting credit approval for their commitments.
But lenders are threatening to pull their commitments if any more banks drop out, and until the transaction is signed uncertainty still surrounds the deal.
Even if it is finally signed, the size of the loan will be dependent on how many banks finally come into it.
Bank of Moscow has been in talks with lenders since August this year, and more banks are thought to have been lined up originally
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