First of all let’s put to bed the idea that August is a meaningless month for Russian syndicated loans. There were six Russian loans last August for just under £2.4bn, four the year before for $1.2bn and no less than 12 in August 2011 for $4.4bn, according to Dealogic data.
This puts the loans market at odds with Russian dollar bonds, where bankers may be forgiven for already having written off the month. There was only one $63m bond deal last August, a stand-out four in August 2012 for $1.9bn, none in 2011, one bond worth $332m in 2010 and none at all in 2009.
But bonds, by their nature, also typically take less time to prepare than loans. That’s one of the advantages of the market. Should the situation change in a month or two then any bond deals that have been left on ice because of sanctions fears could be quickly revived.
That may not be the case for Russian loans, where securing mandates requires more negotiation on terms. And there is anecdotal evidence that Russian borrowers are already weighing up the prospect of favouring other pools of lenders and currencies — in particular the renminbi.
But more important is the strong possibility that the political stand-off will not be resolved over the summer. The EU went through broad ranging sanctions despite finding it difficult to reach an accord among its 28 members on how stringent to make them. A concerted push to replicate the US stance has seen five more state-owned institutions added to the likes of the already-sanctioned Rosneft and Gazprombank, but bankers will have to scrutinise the legal wording at length and at a high level before the impact is clear.
Russia could also become more conciliatory in its outlook towards Ukraine or take a harder line that sees sanctions pressure ramp up further. Nor has there been the chance to conduct a proper investigation of the Malaysia Airlines tragedy yet. Nothing is black or white.
But bankers are right that August is not the worst time to play out this drama. That is simply because if the political crisis continues into the winter months that would be an awful time. Bankers are reasonably confident that most Russian borrowers will be fine this year if they are unable to meet their funding plans. But the outlook gets much more worrying as 2015 approaches.