Russian bond deals on iceComment on this story
Moscow - Russian companies are putting plans for bond deals on hold while banks assess the impact on investor demand of a slump in financial markets following Russia's military intervention in Ukraine.
Russian bank Promsvyazbank said it was delaying a roadshow to investors and credit firm TCS said it would only consider issuing a Eurobond once conditions were favourable again.
“All (is) on hold in the short-term, certainly, but if people calm down it shouldn't be anything more than short-term,” said one debt capital markets banker from a European bank who specialises in emerging markets.
Russia paid a heavy financial price on Monday for its military action in Ukraine, with stocks, bonds and the rouble plunging.
Moscow's forces remained in control of Ukraine's Crimea region on Tuesday but markets partially recovered on hopes of easing tensions after Moscow ordered troops on exercise in western Russia back to base.
But the turmoil has forced bankers to try to assess damage to corporate deals and share sales and to calm clients.
Banks earn sizeable fees to arrange M&A deals, bond sales and to underwrite stock market flotations, but a deal freeze may only have an impact on fees if it turns into a prolonged issue, the banker said.
Investment banking fees in Russia throughout 2013 totalled $805.5 million, up 3 percent from 2012, with fees from debt capital markets accounting for more than a third, according to Thomson Reuters data.
Promsvyazbank had been looking to raise capital via subordinated Eurobonds, a financial market source told Reuters last month. Its investor meeting, scheduled for March 3, was to talk about placing a subordinated Eurobond, according to Kommersant. [ID nL6N0LW2AI]
“According to the current instability into financial markets, we decided to delay the meetings with investors until the situation gets more positive,” Anna Belyaeva, Vice President at Promsvyazbank, said in a statement from the bank's press office on Tuesday.
Russian consumer credit firm TCS's head of corporate finance Sergei Pirogov said on a conference call to analysts on Monday that the company was not compelled to raise additional funding from the market at the moment but would consider a subordinated Eurobond issue if it deemed market conditions favourable, a spokeswoman said.
Pirogov said in December that the company might place a subordinated Eurobond in the first quarter of up to $200 million, according to an Interfax report at the time.
The events in Ukraine will likely affect the prices of Russian loans, with companies facing higher interest rates, RLPC reported on Monday. Talks on five new Russian loans totalling up to $5.5 billion are in advanced stages.
“(M&A and deal underwriting) is going to be delayed and if things continue the equity markets here will be shunned,” one Moscow-based trader said on Monday.
Russian President Vladimir Putin, in his first news conference since Ukraine's ousted leader Viktor Yanukovich fled from Ukraine, said on Tuesday that the turmoil seen in Russian markets was a “tactical, temporary” decision by investors. - Reuters