Most Russian corporates “can refinance risks” over Ukraine crisis

The aggregate exposure of rated Russian non-financial corporates to debt denominated in foreign currency is manageable, according to Moody's Investors Service.
The rating agency said that substantial foreign currency cash balances and export revenues help reduce the risk, while financing from local banks could provide a fallback if access to global financial and debt capital markets dried up.
"The sectors with the least overall exposure to refinancing risk are the oil & gas, telecoms, utilities and infrastructure sectors, since we estimate that their aggregate cash and deposits would be sufficient to cover most or all of their debt maturities until end-June 2015," said Artem Frolov, a Moody's senior analyst and co-author of the report.
"Conversely, the chemicals and mining sectors are the most exposed to refinancing risk as, based on our estimates, their aggregated cash and deposits would only cover 42% and 25%, respectively, of their debt maturities between 1 January 2014 and 30 June 2015," continued Frolov.
In its report, Moody's notes that among the 60 rated issuers it analysed, 47 have a total of $64.2 bln of debt maturities denominated in foreign currency, of which more than $14.7 bln is in public debt instruments including Eurobonds. This is a key source of exposure if Russian corporates' access to global financial and debt capital markets were to become constrained. The remaining 13 rated issuers have either no debt denominated in foreign currency maturing in the 18-month period between 1 January 2014 and 30 June 2015 or no debt denominated in foreign currency at all in their total outstanding debt.
In addition, Moody's notes that many rated Russian corporates have large cash balances in foreign currency and generate a proportion of their revenues in "hard" foreign currency, which mitigates the foreign currency-related refinancing risk. Based on end-2013 data, Moody's estimates that 45% of rated issuers' total cash is denominated in foreign currency and 50% of their expected operating cash flows during the next 18-month period would be denominated in foreign currency.
Moody's assumes that the Central Bank of the Russian Federation (CBR), which has ample foreign currency reserves (estimated at $435 bln), would look to ensure that there are no foreign currency shortages in the system. Rated Russian corporates have around $63 bln of medium- and long-term available credit facilities, of which around $14 bln is denominated in foreign currency and available under their loan agreements with domestic banks. The foreign currency liquidity of Russia's banking system depends to a large extent on the foreign currency resources of the CBR.