UPDATE 2-Russia to tap reserves to help firms refinance
(Writes through with analysts, details)
By Toni Vorobyova and Dmitry Sergeyev
MOSCOW, Sept 29 (Reuters) - Russia decided on Monday to tap its forex reserves and lend up to $50 billion to national companies to help them avert a refinancing crisis, seen by ratings agencies as one of the main threats to the country's economy.
The move marks the first use in a decade of Russia's massive reserves, accumulated through record energy and commodities prices, for intervention other than the support of the national currency.
Russian companies, including oil firms, banks and real estate businesses, have borrowed heavily abroad in past years to fuel growth and buy new assets at home and abroad.
They must redeem or refinance up to $45 billion before the year-end and given the virtual suspension of credit markets, they have repeatedly warned that Russia's decade-long economic growth would stall without state support.
The new pledge to commit almost a tenth of Russia's $560 billion reserves to the companies' refinancing needs exceeds their most ambitious expectations and brings the total package of government support to financial markets to $180 billion.
"It (the measure) fully changes the situation because it means that the threat of a credit crunch and worsening of credit portfolio quality will pass," chairman of MDM Bank Oleg Vyugin told Reuters.
He said the situation would have been much worse if the companies had been forced to borrow from local banks, which are themselves struggling with refinancing and liquidity problems.
The news about state support came after Prime Minister Vladimir Putin held a meeting and unveiled further measures aimed at boosting liquidity to financial markets.
The extra measures were announced as Moscow's main bourse MICEX sank 5.5 percent on Monday, hit by a global market move downwards.
Russia's two most indebted companies, state-run gas export monopoly Gazprom (GAZP.MM) and state oil major Rosneft (ROSN.MM), plunged over six and seven percent, unimpressed by the new measures, as global oil prices fell and investors' exodus from emerging markets continued.
Money market rates hit one-week highs of around 8 percent RUBOND= as firms sought cash to meet month-end tax payments.
ALL WELCOME
Putin said the state will act as previously through its Vneshekonombank (VEB), which could receive up to $50 billion in deposits from the central bank, which runs the reserves.
"Any Russian bank or company can apply to Vneshekonombank for a loan to repay foreign creditors on debts acquired prior to Sept. 25," he was quoted as saying by Prime-Tass news agency.
Trust Bank analyst Yevgeny Nadorshin said the measure might raise questions, especially with the likes of ratings agencies, which have already criticised Russia for plans to use its windfall oil revenues on financial markets support.
"But for public companies it is great news, because it cuts their refinancing risks significantly," said Nadorshin.
"This is an unprecedented supportive step provided by the Russian authorities to the economy, and particularly the financial system," Renaissance Capital said in a note.
"As these measures are implemented, we think the banking system's lending growth prospects for 2009 will become more optimistic, as the refinancing risk will not lead banks to halt their lending activities," they said.
NEW LIQUIDITY MEASURES
Corporate borrowing contributed heavily to record capital inflows of $80 billion and rouble appreciation last year.
But as investor capital has fled Russia since August, in part due to the military conflict with Georgia and the subsequent souring of relations with the West, inflows are now seen at less than $30 billion this year instead of $30-$40 billion before, the economy ministry said on Monday.
Putin also said Russia's central bank may be allowed to lend to banks without collateral, and will be able to compensate some commercial institutions for any losses sustained as a result of lending money on the inter-bank market.
"It is positive, these are very serious steps. But you cannot avoid noticing that they see that risks in the financial system are growing," said Leonid Slipchenko, analyst at UralSib.
The steps are in addition to a market rescue package worth around $130 billion, announced earlier this month in a bid to stop a collapse in Russian stocks and return confidence to an inter-bank market that had all but dried up.
A source close to the preparations of new anti-crisis measures told Reuters it was not yet clear how state money could be lent to banks without collateral.
"It is just an idea. It is very risky for both the central bank and the system as a whole. There have been a lot of opponents of this idea," the source said, adding that if the measure goes through the central bank would lend the money to banks with solid ratings. (Writing by Dmitry Zhdannikov; editing by Andy Bruce)
