The rate of repayment of foreign credit dropped by 40% during the first quarter.
Early data published yesterday from the Bank of Russia on the structure of foreign debt show that the rate of repayment of bank and corporate loans has dropped by 40% during the first quarter of the year. The external private sector debt dropped by $28.9 billion during the first quarter of 2009 compared with $47.4 billion in the previous quarter. Russian Prime Minister Vladimir Putin declared the day before that companies have "in recent months" restructured $174 billion worth of debts, but the Central Bank figures do not bear it out.
The Bank of Russia yesterday published the first assessment of changes in Russia's foreign debt as of April 1. According to the assessment, foreign debt has dropped from $484.7 billion on January 1 to $453.5 billion, i.e. by $31.2 billion. Russia's aggregate external debt reached a record $542.1 billion in the third quarter of 2008, of which $499.3 billion was the private sector debt as of October 1, 2008 (39.5% for the banking sector and 60.1% for the non-banking sector). In the first quarter during the crisis private foreign debt declined by $47.4 billion (the aggregate foreign debt of the non-banking sector dropped by $31.8 billion and of the banking sector by $15.6 billion), and the government sector debt fell by 2.2% (compared with $10.1 billion in the previous quarter).
The rate of repayment of the Russian foreign debt dropped by half between January and March 2009. Yesterday, the Prime Minister answered questions from State Duma deputies after his report to Parliament. There, Mr Putin declared, while referring to the private foreign debt ("about $500 billion"), that "today's corporate debt has been reduced by a third"; according to the Prime Minister, $174 billion had been restructured and paid back. The Central Bank figures do not bear out that claim. From the third quarter of 2008 and until the first quarter of 2009, the private foreign debt declined by $88.6 billion (see table). The data on debt rescheduling can only be assessed indirectly from changes of the breakdown of debts by deadlines published by the Central Bank. The Central Bank has yet to publish the latest data.
In the fourth quarter of 2008, $25-30 billion worth of private foreign debt had been restructured, according to analysts' reports. Thus, if the Prime Minister's claim that the companies have "reduced and restructured" debt by one third are true, then the restructuring of the private foreign debt covered a sum of about $65-70 billion, i.e. about 13-14%, or four fifths of the current payments towards the debt for the entire 2009. During the last six months, private foreign debt was reduced by about 18% of the total sum.
Analysts question such large-scale agreements between companies and creditors, especially considering that repayments in the first quarter of 2009 are close to the figures of payments towards foreign debt. Vladimir Tikhomirov of Uralsib told Kommersant that "it does not follow from the Central Bank statistics published yesterday; the overall debt diminished by less than $90 billion. During the same period the reserves dropped by $172 billion - could it be that the figure had been mistakenly placed where the debt figure was supposed to be?"
Yulia Tseplyayeva of Merrill Lynch remarked that "restructuring cannot diminish the size of the debt unless there were write-offs or swaps for shares. Debts may have been bought; the Central Bank earlier indicated that banks might buy out $85 billion for their clients. But this is guesswork and I would like to hear more detailed clarification regarding that figure."
Explanations have been given, but they are vague: the head of the Government's press service, Dmitry Peskov, clarifying Vladimir Putin's information, told Kommersant that "we are talking about a longer retrospective period than the first quarter of 2009 and the fourth quarter of 2008."
The polemic over the secret figures of private foreign debt rescheduling reflects the larger problem of the lack of transparency of the data and transactions with private corporate credit in Russia. The Government's declaration to refuse assistance to companies in repaying foreign debt ahead of schedule, as well as the resolution of concerns over margin calls and changes in the schedule of credit repayment in connection with the crisis have come against the background of the growing role of Sberbank, VEB, VTB and Gazprombank in the banking and corporate sectors.
The foreign creditors of Russian companies as a rule negotiate rescheduling but government banks are not on their side in this process. The signals from the Russian Government, including a refusal to guarantee external debts through VEB out of the Future Generations' Fund to the tune of $50 billion and permission to buy into the capital of indebted companies, prove to be highly contradictory. Neither Vladimir Putin's figure nor his speech did anything to clarify the situation.
Alexei Netreba, Dmitry Shapovalov