Moscow Credit Bank (IBC), according to the agency Bloomberg, is at risk of falling under US sanctions because of lending to Rosneft. The bank emphasizes that it provides companies with short-term loans in rubles and this format of service does not carry the risks of violation of sectoral sanctions.
Bloomberg reports that the ICD risks falling under US sanctions due to Rosneft's crediting (since 2014, the EU and the US are prohibited from providing oil companies with financing for more than 30 days). At the moment, the IBC is not under sanctions and has no restrictions on attracting funds from foreign investors. In February, MKB sold bonds for $ 500 million. According to the agency, the marketing materials of this placement hardly mentioned its ties with Rosneft, that is, the bank did not warn investors about the risks associated with sanctions.
According to Bloomberg, the state-controlled company "has drawn MKB into its orbit more strongly, when in a difficult period for the bank it placed long-term deposits in it for hundreds of millions of dollars and received billions in the form of secured loans in return." As stipulated by the agency, the money raised by the SPV-structure of the bank did not go directly to Rosneft.
Nevertheless, this maneuver allowed the bank to expand lending to the oil company, showing one of the ways for Russian companies to circumvent European and American restrictions. "Lending to Rosneft may be associated with an increased risk for the Moscow Credit Bank," the agency quotes former Deputy Assistant Secretary of State for Countering Financial Threats and Sanctions Peter Harrell. In his opinion, the level of risk for such lending "is definitely higher today than at the beginning of the year."
In February 2018, MKB placed eurobonds through CBOM Finance Plc for $ 500 million, which were fully refinanced for Eurobonds placed in February 2013. Earlier in November 2016, the bank placed Eurobonds worth $ 500 million, in 2017 - two issues for a total of $ 1.3 billion.
In the ICB, Kommersant explained that, being the leader of recent years among Russian banks in the international capital markets, are extremely sensitive to sanctions risks and are confident that the format of current servicing of such clients as Rosneft does not carry the risks of violation of sectoral sanctions . "For the enterprises of the Rosneft group, the IBC provides short-term loans in rubles," the press service of the bank explained. In addition, the bank is an active player in providing short-term ruble financing against securities of high-quality Russian issuers. "These transactions do not exert pressure on the capital and are low-risk," the press service stressed. The bank believes that short-term ruble financing against securities of Russian issuers does not bear sectoral risks.
A Rosneft spokesman told Kommersant that since 2016 the IBC has made 4 issues of Eurobonds, and coupon rates for these issues varied in the range of 5.55-8.875%. At the same time, Rosneft's statements indicate the cost of attracting foreign exchange financing within 3.5-5.9% per annum (5.9% refers to the old long loan received before the sanctions). "This means that the IBC can not finance Rosneft at low rates, attracting funds for this at high rates, as for the bank this is a direct loss," the company said.