Russian firms turn to Asia for finance as Western funds demur

Wed Apr 30, 2014 6:45am EDT
 
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By Sujata Rao and Michelle Chen

LONDON/HONG KONG (Reuters) - Russian companies shut out of Western markets as a result of the Ukraine crisis are scouting the possibility of raising cash via Chinese or Singapore bonds instead, even if a large scale funding switch to Asia is likely to be a tall order.

Asian investors, eyeing the risks associated with Western sanctions, could prove a hard sell.

Usually prolific borrowers, Russian firms' bond and loan issuance this year has languished as lenders fear getting caught up in U.S. and EU sanctions imposed on Russian individuals in retaliation for Moscow's annexation of Crimea and support for separatists in eastern Ukraine.

But with $150 billion or so owed in debt payments this year, the scramble for funds is driving firms to Asia, a region with cash-rich investors and governments that are less critical of the Kremlin's actions.

"We may see some developments in Asia in exotic currencies such as the 'dim sum' market or in Singapore dollars. We are seeing Russian issuers expressing interest in those segments of the market," said Cecile Camilli, managing director for CEEMEA debt capital markets at Societe Generale.

'Dim sum' bonds refers to debt denominated in China's yuan but sold outside China, most commonly in Hong Kong.

"At the moment it's non-deal related, but they are preparing themselves," Camilli added.

Russia's state-run Sberbank last week held a so-called 'non-deal' roadshow in Singapore and Hong Kong - setting out its stall for investors to test potential interest in lending to the bank. Another government entity, Gazprom, will meet Asian investors next week following news it is close to a crucial gas supply deal with China.   Continued...

 
Vehicles are seen at a gas filling station, owned by Gazprom Transgaz Stavropol, with the company logo of Russian natural gas producer Gazprom seen on the station, in Stavropol in southern Russia, October 9, 2013. REUTERS/Eduard Korniyenko