MOSCOW, July 10. /TASS/. Coronavirus pandemic consequences press Russian companies to revise cost priorities. This can adversely affect amounts of dividend distributions scheduled to 2020 and thereby lead to impairment of the market value of their stocks, Managing Director and Head of Corporate and Investment Banking of Citibank in CEEMEA Irakli Mtibelishvili told TASS on Friday.
"In 2021, companies will not be able anymore to pay dividends in scales of prior years due to the drop in net cash flows," Mtibelishvili said.
This will naturally affect the stock price and may cause discontent of investors, including major stakeholders. "Russian companies were traditionally bought in the first instance because they offered high or very high dividend yields. Nothing has changed in this sense and if a company is unable to keep the yield expected by investors, a downward price adjustment will occur," he said.
Nevertheless, major investors understand challenges the market faces and want to support companies with feasible plans, the banker said. Companies are more concerned of current liquidity and safety of employees, rather than market volatility of their securities. "Issuers attempt to forecast the most pessimistic scenario in priority manner and break it down into time segments," the top manager said.
The year of 2020 will be like the previous one in terms of the activity on the debt market, Mtibelishvili noted. Citi expects at least one IPO of a Russian company and at least two SPOs on the equity market by the year-end.