* State-owned banks cancel loan refinaning plans
* Companies consider smaller loans at higher pricing
* Bankers point to 30-50bp pricing increase
By Sandrine Bradley
LONDON, April 25 Russian banks and companies are
looking for alternative financing to tackle a freeze in
syndicated lending which includes repaying existing loans,
raising new bilateral loans from international and Russian banks
and rouble loans from domestic lenders.
State-owned VTB, Russia's second-largest bank, is likely to
repay a $3.13 billion, three-year loan that is due to mature in
July rather than refinance it, bankers said.
State bank Vnesheconombank (VEB) also cancelled plans to
refinance a $2.45 billion loan this week, citing weak investor
appetite and unfavourable terms for a new loan.
VEB said that it will repay the loan with a view to
returning to the market later in the year when the geopolitical
situation may have changed.
"What the VEB situation has clarified is the suspension of
credit for Russian institutions for the time being at least," a
London based banker said.
VTB has already cancelled plans to refinance this loan, a
second banker said. VTB declined to comment.
"No-one can predict what will happen in the market but one
thing that is certain is that a $3 billion loan is out of reach
today," a third banker said.
The lack of appetite for new loans for VEB and potentially
VTB follows heavy sales of short-dated Russian bank loans in
Europe's secondary loan market in the last month as Western
banks try to reduce their Russian exposure.
Banks have been selling short-dated Russian loans to reduce
the discounts that they have to offer to sell the paper
. Lenders are now also selling VTB and VEB's
longer dated loans after VEB said that it would repay its loan
due to general uncertainty.
VTB's $2 billion loan which matures in March 2016 was
trading at 97.5 percent of face value on Friday and VEB's $800
million December 2015 loan was quoted at 96.4 percent, according
to Thomson Reuters LPC data.
Russian companies are also rethinking their approach as
banks continue to walk away from syndicated loans due to
uncertainty over economic sanctions.
A $1 billion club loan for petrochemicals company Sibur is
still hanging in the balance after several banks pulled out of
Sibur's loan stalled in late March after US sanctions were
issued against some individuals, including Gennady Timchenko,
who owns a 37.5 percent stake in Sibur.
Only four banks are left in the deal, bankers said, which
leaves Sibur with the option of pushing ahead with a smaller
club loan with an accordion feature to potentially expand the
deal and bring in other banks at a later date.
"The prospects of smaller clubs still being put together are
diminishing as the rhetoric around the Ukraine becomes more
urgent," the third banker said.
Borrowers may be reluctant to take smaller loans for
reputational reasons and bankers and borrowers are still arguing
over the correct pricing level for international loans as the
crisis shows no sign of abating.
Loan pricing for top Russian companies was 150 basis points
(bp) before the crisis. Bankers are pointing to a 30-50bp rise,
although some put the figure higher.
"Borrowers will consider reducing the loan size but pricing
is still a sticky issue," the fourth banker said.
Relationship banks may be prepared to offer private
bilateral loans on better terms than market-clearing pricing on
syndicated loans, bankers said.
Norilsk Nickel signed two five year bilateral loans
totalling $750 million from Unicredit and Raiffeisenbank this
"Banks are looking at other ways to deploy money outside of
international syndications and approaching Russian corporates
with good bilateral deals," the first banker said.
Raising rouble-denominated loans from Russian banks is an
increasingly attractive alternative. Sibur was reported to have
signed a bilateral loan with Sberbank this week.
"State owned banks have always been very accommodating," the
first banker said.
Companies that are willing to pay up for smaller syndicated
loans could potentially access the market before the situation
VimpelCom signed a $1.65 billion deal on April 8,
which was smaller than an initial target of $1.8 billion, with a
slightly higher margin, bankers said.
Steel company Evraz, which was not expected to tap
the loan market until after the summer, has brought its
financing plans forward and is pushing for a $1 billion loan.
"Some companies might try to borrow smaller loans now at
reasonable rates compared to local dollar funding and before
prices are hiked and more banks fall out," the second banker
(Editing by Tessa Walsh)