RUSSIA last issued a dollar-denominated bond in 2013. Since then it has annexed part of Ukraine, launched a proxy war in another bit and destabilised the rest. That prompted Western financial sanctions on Russia’s banks and oil firms. Its government, though, can still tap foreign debt markets. On March 1st the ministry of finance said it would appoint advisers this month to help it issue a $3 billion bond.
One explanation might be a need for foreign cash. As Russia’s recession has eased, the government’s cost of borrowing has fallen. It could be planning to filter the dollars to favoured companies. That would help firms struggling to service foreign debt thanks to sanctions and the halving of the value of the rouble since 2014. Alternatively, the government could use the money for itself. The budget assumes an oil price of $50 a barrel and a corresponding deficit of 3% of GDP in 2016. Now the oil price has crashed to $30, the deficit could reach 7% of GDP.
But the private sector is not as desperate as it was, having reduced its external debt by about a third over the past two years. No big foreign-debt repayments are looming. Many firms...Continue reading
Source: Business and finance http://ift.tt/1QuqS31
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