Russian developers safe against credit crunch: PIK

MOSCOW (Reuters) - Russia's biggest developers are unlikely to face bankruptcy in the wake of the global credit crunch thanks to low leverage ratios, the head of PIK Group (PKGPq.L) told Reuters on Monday.

"I do not think any of big companies will go bankrupt because they are underleveraged," Kirill Pisarev, Chief Executive Officer of Russia's largest residential developer, told the Reuters Russia Investment Summit.

"At the same time this is the main negative factor, but we are feeling that it helps us in the end," he said.

PIK has a debt-to-earnings before interest, taxation, depreciation and amortization (EBITDA) ratio of below one, and equity accounts for 50-70 percent of its project financing.

That contrasts sharply with many Western peers, who often finance whole projects solely with debt.

"In Russia, the situation is different because the debt market is underdeveloped and most assets are acquired with their own funds, so we are less dependent on debt financing," Pisarev said.

Founded in 1994, PIK specializes in the development, construction and sale of residential properties primarily for the emerging middle classes in Moscow as well as in the regions where imbalance between demand and supply is especially sharp.

"Apparently we will face an uneasy autumn, the autumn of uncertainty," Pisarev said.

"But we look with a lot of optimism at 2009-2010. Construction volumes will fall this year because of the financial crisis, and taking into account that demand remains quite strong it will support price growth rates at current levels," he said.

The company had revenue of $2.7 billion in 2007, EBITDA $939 million and net profit of $700 million. The combined market value of its properties was $12.3 billion as of January 1, 2008.

(Additional reporting by Melissa Akin, Simon Shuster, Yuliya Komleva and Maria Plis; Editing by Andy Bruce)