CIS STEEL SUMMIT: Russian steelmakers turn to bonds as other finance dries up
Russian steelmakers turned to bonds as other methods of financing became less accessible in the first six months of the year, according to the head of metals and mining at Russia’s Gazprombank.
Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.
Speaking at the 10th Russian and CIS Steel Summit in Moscow, organised by Metal Bulletin, on Wednesday June 27, Alexander Gareev said the country’s steel producers borrowed about $1.5 billion in the first half of the year, and 90% of the sum was borrowed through bonds.
Russian companies have ambitious plans for more bond-based borrowing later in the year, he said.
They have mainly borrowed through the three- to five-year bonds this year, according to Gareev. The bonds constituted about 60% of the total borrowings of $8.8 billion by Russian steelmakers in 2011.
As profitability dropped, following a fall in steel prices, the equity markets have closed for the Russian metal producers and affordable bank loans got more difficult to come by, Gareev said.
Plus, in current market conditions, the steelmakers are aiming to get a stable fixed rate on their borrowing, which normally comes with the bonds, but can’t be guaranteed in the case of the bank loans, he added.