Market participants say that the borrowing binge by Russian banks and corporates in recent years could come back to haunt them, given the much tighter credit market conditions in 2008.
As a recent report by RBC Dominion Securities highlights, after raising overseas funding of $87 billion in 2006 and $93 billion in 2007, external debt repayments will total about $45 billion this year. “Unless we see a near-term turnaround in global credit markets, second/third-tier Russian banks/corporates could have difficulty accessing refinancing credit at any cost, exposing all Russian borrowers to higher financing costs if default headlines emerge,” the report says.
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