Page 36 - bne_May 2021_20210601

36 I Cover story bne June 2021
Destinations 2019
“We are talking about using financing means ... particularly the question
to what extent Belarus should be allowed in future to issue bonds,
by the state or the central bank, in Europe,” German Foreign Minister Heiko Maas told reporters in Lisbon.
Belarus bonds slumped on the first day of trading after the Belarusian government forced the Ryanair flight to land in Minsk.
The yield on the country’s dollar- denominated sovereign Eurobonds maturing in 2031 rose 56bps to 7.81% and it was up 94bps to 6.52% for notes due in February 2023, Bloomberg reported.
Belarus has now become entirely dependent on the large Russian capital market for funding and has already cut itself off from the Western markets. In a sign of the new realities the Ministry of Finance announced in the middle of May that it was planning to issue RUB100bn ($1.36bn) worth of Eurobonds on the Russian market over the next two years to raise cash to meet its debt obligations and
cover the record budget deficit.
Most of the money will go towards serving Belarus’ foreign debt. The external public debt of Belarus as of February 1 was $18.3bn, according to data of the Ministry of Finance
of the republic. In January of this year the country attracted external government loans amounting
to the equivalent to $35.7mn, including $25.5mn from the Russian government and $10.2mn from the International Bank for Reconstruction and Development (IBRD).
In July 2019, the Belarusian Ministry of Finance, after a nine-year break, placed government bonds for RUB10bn on the Moscow Exchange with a maturity of three years. Demand amounted to RUB45bn.
largest players, Uralkali and Uralchem, merged in order to increase their
clout specifically against Belaruskali on the international market.
Oil up next?
After potash the next obvious target is to sanction is Belarus’s oil and gas exports, which comprise 30% of the government’s budget revenues.
The Soviet Union completed two modern oil refineries that were situated in Belarus shortly before
the union broke apart, and these have been major foreign exchange revenue earners for Belarus as they process
Lithuanian Foreign Minister Gabrielius Landsbergis said on May 27 that the EU should consider hitting the oil sector, while Germany's Heiko Maas spoke of measures to target financial transactions, which diplomats said would probably involve preventing the EU from lending to Belarusian banks, which would also hit energy exports, as these need trade financing from Western banks to operate smoothly.
The EU has sufficiently diversified its
oil imports so that it could weather the pain it inflicted on itself from banning Belarusian oil and gas imports, although analysts say that Ukraine would probably
“Ukraine handles most of Russia’s oil and gas piped exports, there is also a significant network of pipes that run across Belarus
to Russia’s Western European customers”
Russian crude and export it, mainly to the West. For example, Ukraine sources much of its diesel fuel from Belarus.
In addition, while Ukraine handles most of Russia’s oil and gas piped exports, there is also a significant network
of pipes that run across Belarus to Russia’s Western European customers that earn Minsk transport fees and
a margin on the refined products.
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exempt itself from these sanctions, as it has few alternative options.
Bonds
Another option would be to sanction Belarusian bond issues. Although Belarus does not rely heavily on
the international capital markets
for funding, it has issued several billion dollars of Eurobonds which need to be serviced.