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Fitch says return to USD bonds to ease Russian corporate refinancing risk

June 09, 18:25 UTC+3 MOSCOW
Fitch expects that larger corporate issuers will be willing to pay a premium to extend these maturities and reduce refinancing risk if the market reopens
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MOSCOW, June 9. /TASS/. Fitch Ratings said a reopening of international bond markets for Russian issuers can significantly improve maturity profiles and reduce the medium-term refinancing risk for companies with foreign-currency debt.

"The European Central Bank's corporate bond-buying program could add to demand as falling investment-grade yields drive more investors into riskier asset classes such as emerging markets. However, Russian corporates would still probably have to pay a hefty premium," the rating agency reported Thursday.

Fitch expects that "larger corporate issuers will be willing to pay a premium to extend these maturities and reduce refinancing risk if the market reopens," the report said. The sectors most exposed to foreign-currency debt are metals and mining, oil and gas and chemicals, all of which generate significant dollar revenues. Domestic-focused consumer, retail and utilities companies on average have less than 20% of their debt in foreign currencies.

Russia issued $1.75 bln in May in its first international bond issuance in nearly three years. Securities for $1.75 bln in total were sold, while the demand was at $7 bln.

Russian corporates were active issuers in the international debt markets prior to sanctions starting in early 2014 with annual volumes averaging almost $15 bln in the decade to 2014. The peak year was 2013, with $32 bln of new issuance.

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