Page 25 - BNE_magazine_bne_September 2019

bne September 2019 Companies & Markets I 25
As reported by bne IntelliNews, this year the Finance Ministry also tapped the foreign debt market, already exceeding its $3bn Eurobond issuance plan for 2019. The ministry raised $2.5bn dollar-denominated Eurobonds maturing in 2029 and 2035 on June 20, following March placement of $3bn and €750mn.
Higher activity of large Russian issuers is attributed by PwC and analysts surveyed by Vedomosti to relative calm is sanction rhetoric after a turbulent 2018. A number of blue chip issuers
Russia: Volume of new issues, $mn
in Russia also have recovered investment-grade ratings from all "big three" rating agencies. At the same time Emerging Marking assets were in favour this year, driven by prospects of lower interest rates by the US Fed. Should such market conditions prevail, more deals are expected in autumn, although reaching $20bn in Eurobonds issued in 2017
is seen as unlikely.
In the local market Russian companies borrowed RUB1.5 trillion in 2019 so far, which makes another $25bn.
bne:FX
Fitch upgrades Russia’s rating, returning it to 2014 level
bne IntelliNews
Global rating agency Fitch upgraded Russia’s investment grade rating on August 9 to ‘BBB’ from ‘BBB-', returning Russia to its 2014 rating and underscoring the ongoing easing of tensions with the west as well as Russia’s improving economy.
Fitch cited Russia’s strengthened policy mix, low external debt and robust fiscal health as reasons for the upgrade. At the same time the agency said that Russia is in a better position to cope with any fresh sanctions imposed by the US, which has also contributed to its ratings upgrade.
“Russia has entrenched a credible and consistent policy framework that will deliver improved macroeconomic stability, reduce the impact of oil price volatility on the economy, and support increased resilience to external shocks. Fitch considers that Russia's strengthened policy mix, underpinned by a more flexible exchange rate, a strong
commitment to inflation-targeting and a prudent fiscal strategy, and its robust fiscal and external balance sheets will help the sovereign to cope with heightened sanctions' risk,” Fitch said in a press release.
The continued threat of sanctions' escalation will weigh on Russia's external financing flexibility, investment and growth prospects, according to the rating agency. However the sanction fears are retreating. The US imposed new sanctions on Russia last week connected to the poisoning of Sergei Skripal, a former Russian spy living in the UK, but investors shrugged them off as largely symbolic. The US banned American investors from participating in any new issues of sovereign debt on the primary market but left existing debt untouched and also didn't ban buying the debt on the secondary market or owning it.
Russia’s Ministry of Finance doesn't rely on the Eurobond market for funding and issues these bonds more as
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