MOSCOW: Russia’s central bank offered yesterday to help top exporters refinance foreign debts next year, expected to be one of the toughest of President Vladimir Putin’s 15-year rule for the economy due to Western sanctions and a plunge in oil prices.
The bank said it would lend dollars and euros to major companies that were willing to put up their foreign borrowings as collateral.
The move means the state will in effect take on credit risk for the companies, whose foreign debt obligations have shot up in rouble terms because of the currency’s sharp slide this year.
Even before the move, Standard and Poors put Russia’s sovereign credit outlook on “creditwatch negative” — it could be downgraded to junk as soon as January due to a “rapid deterioration of Russia’s monetary flexibility”.
S&P, Moody’s and Fitch are now all rating Russia one notch above junk.
While Russia’s sovereign foreign debts are minimal, state and private companies and banks have accumulated US$600 billion (RM2.1 trillion) in foreign debts, of which around US$100 billion are due next year.
The ability to repay the loans or roll them over has been severely reduced this year by Western sanctions, on Russia which effectively shut its companies and banks out of Western debt markets. Reuters