Tuesday, September 2, 2008

How the financial crises engulfs Russia

Exacerbated by the military crisis in Georgia Russian cooperations encounter difficulties in accessing international capital markets. The German newspaper Handelsblatt notes that Russian firms placed only $80 million bonds in August according to data from US investmentbank JP Morgan. In April to July period between $4.1 and $5.4 billion were placed.

According to Reuters Russian firms have issued 73 billion Rubel denominated bonds (2.02 billion euro) in the last 5 weeks with interest of about 13 percent. According to the Handelsblatt article, citing a dealer in Moscow, two thirds of smaller firms had to pay even higher interest rates.

Russian banks are joining other financial institutions around the world in some sort of capital squeeze. Yesterday the Russian Central Bank injected 149.1 billion Rubel (around 4 billion euro) into the market. Citing Natalja Orlowa, chief economist of Moscow's Alfa bank, Handelsblatt argues that the amount of money injected is twice as much as expected. In addition reserves deposited at central banks accounts by about 1300 Russian banks are with 700 billion Rubel at a record low.

In addition to slowing global growth, high inflation and high energy prices this poses just another challenge. Firms that have to refinance loans in the months ahead will have to pay a high price. This seems certainly true for Russia but these days it is truly a global phenomenon.

click to enlarge

source: Russische Firmen kommen nur noch schwer an Kapital

von Andrea C√ľnnen, handelsblatt.de

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