While credit market conditions in Russia have tightened in recent months, there is no indication that Western sanctions imposed on the conflict in Ukraine have led to a decline in bank credit supply to the Russian economy, London financial analysts said in a Monday review.
Stressed that the financial impact of sanctions has not yet been fully felt
Economists from Capital Economics, one of the largest financial and economic analysts in the city, say there are no signs of a collapse in the Russian credit market as it did after the 2008 financial crisis.
At the same time, house analysts point out that interbank interest rates are already rising, and this is beginning to infiltrate the credit costs of the real economy.
According to Capital Economics, the average interest rate on ruble loans to the Russian corporate sector has increased by 150 basis points to 11 percent since the beginning of the year, while the interest rate on dollar loans has increased by 200 basis points to over 7 percent.
In addition, the company’s economists say there are good reasons to believe that credit conditions in the Russian economy will tighten further in the coming months.
Which Capital Economics forecasts
The Russian central bank is also expected to contribute to this, which Capital Economics forecasts will respond to further ruble pressures this month by raising interest rates this month.
However, the House expects that Western sanctions will not fully begin to affect the Russian economy until after.
True, net outflows in the third quarter of this year dropped to $ 13 billion from $ 24 billion in the second quarter, but still exceeded the third-quarter nominal current account surplus in Russia, which was $ 11 billion.
In addition, the weakness of the ruble indicates that capital outflows have accelerated again in early Q4, according to a London Economics study Monday.
According to the House
this is particularly worrying given that Russia’s external debt repayments will increase towards the end of the year, and in this situation Russian financial authorities may be forced to tap foreign currency reserves to help private debtors meet their repayment obligations.
Other large London houses also consider downgrading Russian sovereign ratings as a significant risk in a deteriorating financial environment.
Bank of America-Merrill Lynch’s London-based analysts at emerging markets (BofA Merrill Lynch Global Research) said in a recent study that they primarily see Good Finance’s Investors Service and Fitch Ratings re-qualify Russia, Poor’s grades.
Of the three major credit rating agencies, E-Money ranks Russia with the weakest “BBB minus” foreign currency rating. Fitch maintains a Good Finance’s rating on Russian sovereign debt by two grades.