Page 52 - RusRPTFeb20

6.2 ​Debt
Russia - External debt 2012 2013 2014 2015 2016 2017 Jan-Jun ‘18
Budget: external debt (USD bn)
2,363.52 2,844.56 2,729.43 2,169.01 2,073.22 2,096.24 1,005.41
Budget: external debt (% GDP)
29.02 31.73 29.07 37.89 39.83 32.84 /
source: CEIC, CBR
Russia's external debt climbs by $27bn to $481bn in 2019. ​According to preliminary figures from the CBR, the country's external debt expanded by almost $27bn last year to $481bn.
The increase was partly attributable to the stronger ruble (which was up almost 12%), but most of the increase was due to the public sector, as government debt and the CBR's external debt rose by $26.5bn to $82bn (around $3bn of this due to the revaluation effect).
Nonresidents bought $5.5bn of Eurobonds and $20.4bn of local government bonds (mostly OFZs) during the year. This chimes with data for nonresident holdings in the OFZ market, which reached almost 32% of the whole market ($46bn) by the end of last year.
In the corporate sector, foreign debt was up $8.3bn last year to $323bn, though this was mainly the result of the stronger ruble, which accounted for $8.1bn of the rise. In terms of instruments, the rise in foreign corporate debt was mostly in the form of loans from shareholders and related entities (up $7.5bn), which could also include some Eurobond placement proceeds (a net sum of around $1.5bn, according to our fixed income analysts' estimates) and trade credits (up $2.1bn). This inflow was offset by an outflow from banks, as their external debt shrank by $8.1bn to $77bn.
Given that the Finance Ministry plans net OFZ issuance of $26-28bn this year, public external debt will continue to climb, as local rates remain attractive for foreign investors. The banking sector's external debt will likely continue to shrink (due to surfeit FX liquidity and sanctions), but the corporate sector appears set to witness a turnaround, with external borrowing starting to grow more strongly again.
Low growth and sanctions have prompted Russia’s private sector to deleverage​ and significantly reduce its stock of external debt in 2019.
The debt stock of the private sector was $461 billion in 2016, $448 billion in 2017 and $400 billion in 2018. The banking sector is set to continue to cut its net debt in 2019 as it was able to refinance only around two-thirds of its debt.
However, for the first time in many years non-financial enterprises were on course to refinance and borrow more than they repay. This will lead to a net rise in the external debt of the real sector of around $13 billion in 2019.
Overall, the stock of private external debt is likely to be unchanged in 2019 from the year before. In the view of the Development Centre, the private debt stock may start to rise from 2020 as bank deleveraging slows, and non-financial companies continue to increase borrowing.
52​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com