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Debt Market Divided
According to a rating of organizers of Eurobond issues for the first half of the year conducted by the Cbonds information agency, there has been a tripling of the hard-currency borrowing by Russian companies due to the size of the securities issues and the cheap financing available on them. That market is controlled by Western investment banks. The volume of that borrowing by Russian companies reached $25.7 billion. Gazprom, Alfa Bank and LUKOIL are mainly responsible for that jump, but the total number of issuers rose from 67 in the first half of last year to 142 in the same period this year. The domestic debt market, on the other hand, is divided among Russian banks.
Russian companies prefer to take out loans in the West, since the financing is cheaper and the term can be longer than in Russia. The volume of loans on the ruble market increase 58 percent in the first half of the year over the first half of last year to 319.6 billion rubles. Troika Dialog increased its activity sharply with $45.1 billion, and MDM Bank and TrustCreditBank rose to the top 15. Last year's leader Gazprombank, however, fell to 10th place this year. The top 15 organizers of ruble loans occupy 89 percent of that market.
The number of Russian banks organizing loans in hard currency has decreased. Last year, there were three Russian banks among the top 15, KIT Finance, MDM Bank and TrustCreditBank. This year, only TrustCreditBank is among the leaders. Experts say that Russian banks are unable to guarantee the large demand for Russian issuers that Western banks produce, noting that a worldwide sales network is essential for the successful placement of a Eurobond issue.
Western banks are becoming less active with Russian borrowers. Although they formed the market several years ago, they are not interested in working with Russian companies of the third and fourth echelons due to the low remuneration from those activities.
www.kommersant.com
All the Article in Russian as of July 23, 2007
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Photo: Sergey Semyenov
