Why Putin Is Smiling At The Bond Market's Blockade Of Russia

One of the recurring themes the western media regurgitates at every opportunity is that while the western "diplomatic" sanctions against Russia are clearly a joke, one thing that will severely cripple the economy is the capital market embargo that has struck Russian companies, which are facing $115 billion of debt due over the next 12 months.

Recall that not a single Russian Eurobond issue has successfully priced since Russia's peaceful annexation of Crimea. Surely there is no way Russia can afford to let its major corporations - the nexus of its petroleum trade - go insolvent, which is why Putin will have to restrain himself and beg western investors to come back and chase appetiziing Russian yields (with other people's money of course). Turns out this line of thought is completely wrong.

Bloomberg explains:

Russian companies, facing $115 billion of debt due over the next 12 months, will have the funds even as bond markets shut because of the Ukraine crisis, according to Moody’s Investors Service and Fitch Ratings.

Firms will have about $100 billion in cash and earnings at their disposal during the next 18 months, Moody’s said in an analysis of 47 businesses April 11. Almost all 55 companies examined by Fitch are “well placed” to withstand a closed refinancing market for the rest of 2014, it said in a note on April 16. Banks have more than $20 billion in foreign currency to lend as the tensions prompted customers to convert their ruble savings, ZAO Raiffeisenbank said.

“The amount of cash on balances of Russian companies, committed credit lines from banks and the operating cash flows they will get is sufficient for the companies to comfortably service their liabilities,” Denis Perevezentsev, an analyst at Moody’s in Moscow, said by phone on April 17.

So, Russia can comfortably extend its Ukraine campaign well into 2015? Truly great news for Kiev, which is already bankrupt, and which is scrambling to get every last bcf of gas it can get its hands on before  Gazprom finally pulls the plug in under a month.

Ah, the miracles of positive cash flow... and how quickly it eliminates any so-called political leverage the bearer of the world's reserve currency thought it may have had, leading ultimately to this.

Comments

[highwaytoserfdom]

Vlad has the cash.. Krugman says dollar has the guns?  what is the problem..    You mean CVA/DVA (debt valuation adjustment – DVA), and that of its counterparty (credit valuation adjustment – CVA) o the Blythe Masters weapons of mass destruction can't bring down the BRICS?   Why am I uneasy about moral high ground?    Guys better give Germany it's gold  they already have 1 in 10 US jobs, Chinese Smithfield Chinese, GE plastics Saudis, Cargil French (90% meat packing, grains, edible oils)  

Is this Paulson's  Marshal law?  Immigration ?  Heck those walls are to keep us in..  T student debt, 68T lockbox unfunded, 50m Chinese solar REID,,,    WTF is going on..

[The wheels on t...]

Isnt this obvious, Washington is provoking Putin to crash the system, so they can blame someone else for their fucked up monetary policies other than themselves.

Do you think the FED is going to admit to their errors by saying 'My Bad' and cause a Civil War when the whole thing falls like a pack of cards, leaving people homeless, jobless and starving?

They need a culprit, Putin knows that, and will probably not play the game.

[vyeung]

Debtors are debtors. No way around it.

The Art of War for those that never read it or even heard of it is to win a conflict without firing a single shot. That is the true Art of War, not the gangster type that is exported by Langley and its cohorts.