Syndicate's revenge: why Sechin has to fear new EU sanctions

New EU sanctions against Russia may hit the access of Russian companies and banks to the European capital market. Which companies will be hit the hardest?
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"Possible measures - this (ban) to attract debt capital (through bonds, equities, and syndicated bank loans) defense companies, as well as companies whose main activity is the exploration, production and transportation of oil and oil products, and in which the state is the majority shareholder or holder controlling stake ", - quotes the Financial Times the document on new measures against Russia, the European Commission circulated among EU member states. If the ban on raising capital for Russian companies through bonds was limited to the previous package of sanctions, a ban on syndicated loans (issued by a pool of banks in general terms) - New measures in the European Union.

In most of the syndicated loans depend on state-owned companies. In the first place on their volume "Rosneft".

The company, controlled by Igor Sechin, has received $ 31.4 billion syndicated loan to finance the transaction on purchase of TNK-BP. In total, these loans accounted for nearly 60% of the total debt of the company, or 1.25 trillion rubles. In the first half of 2014, the duty of "Rosneft" to foreign banks amounted to 1.76 trillion rubles, which holds a stake of 80% of the company's debt. In the "Rosneft" declined to comment.

That "Rosneft" is most vulnerable in terms of short-term refinancing, according to BCS analyst Artem Usmanov. "Nevertheless, the company has a high level of liquidity reserves - 700 billion rubles in the first half of 2014, as well as an additional source of funding in the form of an advance payment on the contract on the supply of oil to China," - says the expert. Despite this, the head of the company Igor Sechin called on the government for assistance in the amount of 1.5 trillion rubles, which is explained by sanctions.
In second place is "Gazpromneft" on the use of syndicated loans.

All of its debt - 280 billion rubles - consists of syndicated loans. This is 15% of "Gazprom" parent debt at the end of 2013, but "Gazprom" and "daughters" under Western sanctions have not got. In the "Gazpromneft" reported that she was able to raise funds on the most favorable at the time sdelaconditions. "Over the years, the company maintains a low level of the ratio of net debt to EBITDA (currently - 0.64), while the share of short-term debt stands at only 15%. "Gazprom Neft" will continue to consider all opportunities to raise funds in order to, if necessary, to determine the optimal way of loans, "- reported in Forbes," Gazprom oil ".

Tangible dependence on syndicated lending remains an independent manufacturer of "Novatek" gas spring which came under US sanctions. It accounts for almost 30% of the company's debt, or $ 1.5 billion. Much depends on the syndicated "Sovcomflot", which is also engaged in the transportation of petroleum products. Last year the company took $ 700 million for the construction of ships for seven years. This is 26% of the company's debt. In the "Novatek" and "Sovcomflot" declined to comment.

"A lot will depend on how quickly the company will find an alternative source of loans prior to maturity of the current, - says head of the analytical department of the" Capital Management Company"Andrew Verkholantsev - Most likely, these sources will be more expensive because of the risk premium, which may adversely affect the performance of the company."

According to Artem Usmanov, the long-term acceptance of a ban on lending from European banks would have a negative impact on the company's ability to realize long-term projects.

On government-related banks ban syndicated loans will affect not so much.

According to IFRS for the first half of 2014, VTB, Sberbank, Gazprombank syndicated loans occupy about 1% of the debt. But a lot more new sanctions affect EBV, since they occupy 3% of its debt. According to leading analyst "Olma" Anton Startsev, it only proves once again that the Central Bank will have to support state-owned banks. "The impact of new sanctions will be negative, but the effect will not be as big, because already existing sanctions restrict Russian companies and banks in lending in the US and European markets", - says the old man.

"Of course, sanctions in the financial sector willtighten the situation with funding and liquidity in the banking market - interest rates will rise, "- adds Verkholantsev.