Oleg Deripaska's debts will be paid by Russian taxpayers

The government of the Russian Federation has already expressed its readiness to help companies of oligarchs who fall under American sanctions. In financial terms, this could cost $ 13 billion.
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The Russian government will begin preparing measures of state support for companies that have fallen under new US sanctions, the head of the Cabinet, Dmitry Medvedev, said on Monday.

Help should receive all the enterprises of billionaire Oleg Deripaska, who were listed on the "black list" of the US Ministry of Finance.

"This applies to both metallurgists and the energy sector," Medvedev said, unequivocally hinting at Rusal, in which Deripaska controls 48%, and En + holding, which in addition to aluminum plants includes power plants with a total capacity of almost 20 gigawatts.

Support will also be required to ensure "trade in defense industry products," Medvedev added: Rosoboronexport, which annually sells weapons worth $ 15 billion, is also included in the US blacklist.

An entry in the SDN list means a complete ban on US residents for owning shares and bonds of subordinated companies and any settlements with them.

In fact, the US Treasury gave American legal entities a month (until May 7) to completely withdraw from all investments in Deripaska's business - RusAl, GAZ Group and En +. Until June 5, all operations and agreements with them should be discontinued. Prohibited, including transactions through third parties, which may also fall under the sankitsionny regime.

For "Rusal" it is highly likely to default on eurobonds, analysts of Raiffeisenbank warn: in fact, sanctions prohibit transactions through korcheta in American banks, making it impossible for dollar payments and, as a consequence, repayment of loans to Western creditors.

To fully refinance the debts of those under the sanctions of the companies will require $ 13 billion, estimates the head of operations in the Russian stock market, Fried Finance, George Vashchenko. This is almost 800 billion rubles at the current rate - more than a year the federal budget spends the whole system of higher education (626 billion rubles) or health (450 billion rubles).

While the relatively high prices for aluminum help to keep the situation relatively high: $ 2100 per tonne - this is approximately 20% higher than the level at which Rusal's profitability will begin to deteriorate, Vashchenko says.

However, the company will not be able to sell in former volumes: global American traders will refuse to deal, and in the United States, 18% of Rusal's products were spent, Raiffeisenbank recalls. We will have to look for channels for sales through Asia, and this will significantly reduce both the margin and the volume of operations, the bank believes.