Russia

The gloom over Russian capital markets was lifted a little this week as the US Treasury softened its stance towards sanctioned aluminium behemoth Rusal, giving hope to markets that the announcement of new sanctions against Russia at the beginning of April may not have been a knockout blow, write Sam Kerr, Francesca Young and Mike Turner.

Sanctioned Russian aluminium company Rusal’s $500m 4.85% 2023s are once again trading and holders are expecting a rocky ride as compliance departments clash with analysts over their worth.

Lenders to Rusal, the sanctions-hit Russian aluminium company, may escape the situation without losing money if they can hold their nerve, loans bankers said this week.

The US Treasury, through the Office of Foreign Assets Control, has issued a new licence to US holders of debt or equity in EN+, Rusal and Gaz Group. It gives US persons until June 6 to divest their holdings in these companies, instead of the original deadline of May 7.

News last Friday from the London Stock Exchange (LSE) that Oleg Deripaska is set to give up his control of Rusal by removing his majority stake in EN+ (Rusal’s parent) is the best possible outcome at this point for the US, for Russia, and for investors.

Mining company Polymetal has converted an existing $80m bilateral credit facility with ING into a sustainability-linked loan. It is the first loan market activity from Russia since the US announced a fresh round of sanctions against some of the country’s oligarchs.

Cherkizovo, the Russian meat and sausage producer seeking to list on the Moscow Exchange, has failed to get its re-IPO away, citing market volatility for postponing the deal.

Mining company Polymetal has converted an existing $80m bilateral credit facility with ING into a sustainability-linked loan. It is the first loan market activity from Russia since the US announced a fresh round of sanctions against some of the country’s oligarchs.

Renaissance Capital has added to its emerging and frontier markets team with the appointment of Ivan Kachkovski as an equity research analyst.

Investors in Rusal’s bonds have lost this round. But the game of investing in Russia has not finished yet.

With the shock of the latest round of Russian sanctions receding a little, EM investors are already seeking out the opportunities that last week’s volatility created. Even one holder of the sanctioned and problematic Rusal debt said he has increased his exposure to Sberbank.

Lukoil has raised a $600m 10 year export credit agency-backed loan via its Uzbekistan subsidiary, as bankers say the loan market remains open for some Russian borrowers.