Deprived of access to credit and loans the West in the country, Russian companies are waiting for money from China. But take in the PRC is not easy: the market is small, and in line for the yuan Russia is not in the first place. «Junk» rating and the threat of running into problems with the West deter Chinese investors. In addition, they tend to go directly to the projects, rather than simply providing funding, informs «Pacific Russia».
Russian banks are faced with tough new restrictions due to geopolitics. US authorities froze the assets of two Russian banks totaling $ 640 million, according to a Friday newspaper The Wall Street Journal. The bank «Russia» blocked $ 572 million, or 10% of total assets, the ministry said the US, SMP Bank — $ 65 million. US this week threatened new financial sanctions against Russia.
Just last year, according to Finance Minister Anton Siluanova, Russia has lost about $ 40 billion due to geopolitical sanctions, including financial constraints. Roughly similar rates ($ 36 billion) result from the balance of payments data for 2014, says the head of the analysis of monetary policy and banking system of the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) Oleg sun.
What exactly the volume of liquidity to Russian banks and companies have lost because of the close access to Western markets is uncertain. Loan amounts from previous years are unlikely to serve as a guide. In 2013, for example, only one «Rosneft» has attracted more than $ 30 billion to buy TNK-BP from a consortium AAR: it is clearly not going to do the same in 2014. In addition, the external borrowing requirement, companies are not the same as in the pre-crisis years. On the other hand, the high rate of the Central Bank (initially 17% and now 15%) can not compensate for the lost western liquidity within the country. And tens of billions of dollars of Russian players will have to search in China.
«Efforts are being made to gain access to the Chinese capital markets is necessary because life has shown that having a single source of funding in the US and the EU countries is fraught with unpredictable risks», — says business ombudsman, long time head of the Russian part of hossiysko-China Business Council, Boris Titov. He calls the health of the Russian business in China «good».
Individual companies do manage to borrow. So, Vimpelcom in November signed an agreement to open a credit line of $1 billion in the China Development Bank and Bank of China for eight years. «Megaphone» in December — at $500 million from the same China Development Bank Corporation for seven years to purchase equipment and services from the same Chinese Huawei.
«From the point of view of their investment opportunities China could afford large-scale investments in the Russian economy,» — said the deputy chairman of the «Bank settlements and savings» Igor Dmitriev. According to the Financial Times, the volume of China’s foreign investment over the last ten years has increased 40-fold, to $108 billion, and has only in January-September 2014 the Chinese outbound direct investment amounted to $75 billion.
«We can see that most of the Chinese economy are urgently needed such investment: it is impossible to invest growing amounts of foreign currency liquidity only in foreign exchange reserves, they had already reached $ 4 trillion», — says Dmitry.
But Chinese investors, in contrast to Europe and North America prefer direct investment portfolio.
«It means long-term entry into the projects, the need for political guarantees, resolve issues of national security, as applied to our country it often comes to the use of natural resources», — said the deputy chairman of «Bank settlements and savings».
«In China, different from Western banks decision-making system, it is largely focused on the needs of Chinese investors overseas, joint projects — adds Boris Titov. — It is unlikely that our business structure, accustomed to working with Western financial institutions will be able to regroup quickly».
«Russian companies may face a number of obstacles due to the internal regulations of the PRC» — warns director of investment and trading department «Absolut Bank» Sergey Mikhailov. Thus, the Regulatory Commission China Banking restricts lending industries with excess capacity, commercial and residential real estate. «From the side of the main administration of exchange control of China keeps a tight exchange controls in terms of capital transactions», — says expert «Absolut Bank». And even the Shanghai Stock Exchange, the largest marketplace in mainland China, according to him, is still not fully open to foreign issuers and investors.
With regard to the banking sector is, then talk about the possibility of attracting Chinese money of depositors is also not necessary. «Despite the liberalization of interest rates», the People’s Bank of China «is still a directive establishes a» ceiling «in deposit rates, making it difficult to compete with large local banks in terms of fundraising», — says Mikhailov.
«Even at the opening of a Russian bank’s correspondent account in a Chinese bank could take more than a year — confirms Igor Dmitriev. — Where the language barrier: the correspondence must be conducted in Chinese, because, surprisingly, the Chinese know English is not always in the right amount. And a special workflow system, which is different from our usual Russian or international. And especially the reconciliation process: it is long, complex and multi-step».
«Replacing the western Chinese funding financing — a long process» — sums up Sergei Mikhailov.
US has not yet succeeded in negotiating the accession of China to the anti-Russian sanctions. However, Chinese businesses can not ignore the current geopolitical situation. «We negotiated a loan with major Chinese banks — said the representative of the Russian company, who wished to remain anonymous. — Everything went well. But then we were told that 40% of the business they have in the US and they do not want complications with their American partners».
«Wait Chinese loans not worth it, — confirms the general director Optim Consult (Guangzhou, China) Evgeny Kolesov. — At the end of last year, the main newspaper of China’s «People’s Daily» published an article in which Chinese experts have called the ruble too volatile and risky currency. In fact, cooperation with Russia in today’s environment called unpredictable. China has taken a wait and see attitude, and everything suggests that the risk by investing in Russia, it will not».
If we talk about raising funds through bonds, the bond market, issued in Hong Kong, or, as they are also called, «Somavia dim sum» (from the name of the traditional dishes), although increased over the past five years, more than ten times (up to 324 billion yuan, or $ 52 billion), but according to experts, is small. «Russian major banks and corporations interested in bonds» dim sum «for a long time. In 2013, «Gazprom», «Agricultural Bank» and the bank «Russian Standard» paper placed about $ 480 million in 2014 — $400 million», — said the head of research group of the world economy CMASF Alexander Apokin.
For comparison, the Russian corporate Eurobonds placed in 2014 at $ 11.6 billion, and in 2013 — at $ 49 billion.
That is, the depth of the market is not large enough to be able to attract investors and painlessly placed on a comfortable rate.
«In addition, not all investors are willing to buy securities of Russian companies at risk of sanctions when the market is issued by other foreign borrowers, which form about 70% of the supply of bonds» dim sum», — says Apokin.
In the Chinese market, investors regard the Russian securities as a risky investment, not differing in this from the western colleagues.
«After the fall of oil prices and the ruble exchange rate long-term debt VTB and» Agricultural Bank «is strong enough to have lost value. Investors now see them as riskier instruments than four or five months ago», — says Apokin. After dropping the Russian credit rating to non-investment, or «junk» wishing unlikely to become greater. However, the Chinese rating agency Dagong appreciates Russia.
«There are a number of risks associated with the dynamics of the renminbi against the ruble. To counteract this risk, additional financial instruments whose market is not too deep compared to the market instruments on the ruble / dollar.
Therefore, the Russian financial institutions are unlikely to painlessly move from funding in the US and European markets to finance in Hong Kong and Singapore» — sums Apokin.
Even with the development of the market «Dim Somavia» a few years funding from the Asian markets, he said, will be able to replace 10-15% of modern finance in Europe and the United States. According to the forecast Deutche Bank, bond issue «dim sum» in 2015 will amount to 350 billion yuan ($56 billion).