Bank of Rus­sia opts for 'ver­bal in­ter­ven­tion' to halt ru­ble rout

The Pak Banker - - COMPANIES/BOSS -

Rus­sia's cen­tral bank said cor­po­rate debt re­pay­ments this year won't over­whelm the for­eign- ex­change mar­ket with "ex­ces­sive de­mand," seek­ing to in­ject calm as the ru­ble tum­bled the most among de­vel­op­ing na­tions on Mon­day.

Com­pa­nies and lenders have to re­pay as much as $35 bil­lion out of the $61 bil­lion in for­eign debt that falls due from Septem­ber to De­cem­ber, the cen­tral bank said in a state­ment on its web­site. The rest may be rolled over or re­fi­nanced be­cause some of it is owed to af­fil­i­ated com­pa­nies, it said. Pol­icy mak­ers are try­ing to avert another ru­ble col­lapse af­ter for­eign debt re­pay­ments by com­pa­nies last year helped spark Rus­sia's worst cur­rency cri­sis since 1998. With a re­newed slide in com­mod­ity prices ham­mer­ing the ru­ble, the cen­tral bank last month halted for­eign-cur­rency pur­chases to boost its re­serves.

"It's ver­bal in­ter­ven­tion aimed at sta­bi­liz­ing mar­ket sen­ti­ment re­gard­ing the ru­ble," Dmitry Dol­gin, an economist at Alfa Bank in Moscow, said by e-mail. "There are con­cerns on the mar­ket that the loom­ing re­pay­ment of ex­ter­nal debt will ex­ert sig­nif­i­cant pres­sure on the bal­ance of cur­rency de­mand and sup­ply on the do­mes­tic mar­ket, es­pe­cially un­der the con­di­tions of fall­ing oil prices." The ru­ble fell for a fourth day, de­pre­ci­at­ing 0.5 per­cent to 64.37 ver­sus the dol­lar at 1:04 p.m. in Moscow, its weak­est level on a clos­ing ba­sis since Jan. 28. The drop was the steep­est on Mon­day among 24 emerg­ing-mar­ket cur­ren­cies tracked by Bloomberg.

The Rus­sian gov­ern­ment's fiveyear bonds dropped, push­ing the yield up three ba­sis points to 11.13 per­cent, while the Micex in­dex of stocks de­clined 0.4 per­cent. Lenders and com­pa­nies have ac­cu­mu­lated about $135 bil­lion in liq­uid for­eign as­sets, ac­cord­ing to the cen­tral bank. The na­tion's cur­rent-ac­count sur­plus, which may also help fi­nance debt re­pay­ments, is es­ti­mated at about $20 bil­lion with oil at $40 a bar­rel, it said in the state­ment.

The Bank of Rus­sia also has about $14 bil­lion avail­able in for­eign-cur­rency re­pur­chase fa­cil­i­ties from its $50 bil­lion pro­gram un­veiled last year. The share of "in­tra-group li­a­bil­i­ties," or money owed to af­fil­i­ated com­pa­nies, is es­ti­mated at 74 per­cent of all ex­ter­nal debt re­pay­ments in Septem­ber, 59 per­cent in Oc­to­ber, 8 per­cent in Novem­ber and 48 per­cent in De­cem­ber, ac­cord­ing to the cen­tral bank.

The reg­u­la­tor cited its sur­vey of the 30 big­gest Rus­sian com­pa­nies that ac­count for as much as 60 per­cent of to­tal re­pay­ments by non-fi­nan­cial or­ga­ni­za­tions through the rest of 2015.

The cen­tral bank's com­ments "will par­tially sup­port the ru­ble, but will ap­peal mainly to the most emo­tional, spec­u­la­tively bi­ased in­vestors," said De­nis Davy­dov, an an­a­lyst at Nordea Bank AB in Moscow. "The most vul­ner­a­ble is­sue for the mar­ket is the price of oil."

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