* U.S. imposes toughest Russia sanctions yet over Ukraine
* Sanctions prevent new loans by U.S. lenders to targeted
* Sanctions include Rosneft, Novatek, Gazprombank and VEB
* The 4 have $32.3 bln syndicated loans maturing in next 5
(Adds no comment from VTB)
By Sandrine Bradley
LONDON, July 17 New U.S. sanctions imposed on
Russia for its actions in Ukraine will make it more difficult
for Russian companies to refinance existing international loans
and has dashed hopes that Russia's syndicated loan market is
reopening, bankers said on Thursday.
Washington announced its toughest sanctions yet on
Wednesday, which directly target several Russian companies and
financial institutions with close ties to Russian President
The companies include Russia's largest oil producer, Rosneft
, its second-largest gas producer, Novatek,
its third largest bank, Gazprombank, and state-owned
bank Vnesheconombank (VEB).
Thomson Reuters LPC data shows the four companies have a
combined $32.3 billion of syndicated loans outstanding in the
next five years, which could be difficult to refinance.
The move could also close the market for other Russian loans
that are currently in the market and make it impossible to raise
any new loans.
Gazprombank is the most immediate casualty of the fresh
sanctions. The bank is seeking a $1 billion, one-year loan to
refinance one of $1.2 billion that is due to mature in
Bank of America Merrill Lynch, Citi, Goldman
Sachs and JP Morgan are among the consortium of
international banks that lent it the maturing $1.2 billion.
Dutch bank ING, which was also part of the
consortium, declined to comment on Gazprombank. A spokesman said
ING had been reducing some of its exposures in Russia and
Ukraine but remained committed to both countries.
"We are looking at our exposures as a result of the
situation in the Ukraine and Russia, but we have a long history
in both Russia and the Ukraine and intend to remain a long term
player there," a spokesman said.
Gazprombank said in a statement on Thursday that equity and
long-term debt with maturities of 90 days or more from U.S.
entities were affected.
This means that U.S. banks will be unable to lend to the $1
billon one-year loan that Gazprombank is currently seeking.
"At best there will be a very long pause on Gazprombank, but
I expect in reality it will be off the agenda," a senior loan
It could simply repay the loan, as VEB did at the end of
April with a $2.5 billion loan it had originally planned to
Slavneft, which is part-owned by Rosneft, has mandated
Raiffeisen Bank International to arrange a new $500 million
Rosneft is also in the market with a $2 billion oil
prepayment deal that it is raising with Swiss energy trading
Banks were also due to sign a $1.5-2 billion loan for listed
state-backed bank VTB before the new sanctions were announced on
That deal was set to re-open the Russian loan market, as it
was the first Russian loan to include U.S. banks since Russia
annexed the Crimea.
The deal is now expected to be put on hold as U.S. banks
reassess their ability to lend.
"I suspect there will be delays on VTB; people need to
digest the implications of what has happened," the senior loan
Slavneft was not immediately available to comment. Rosneft,
Vitol, Raiffeisen and VTB declined to comment.
MARKET RALLY QUASHED
The new sanctions have come as a surprise to bankers who
were working to reopen the Russian syndicated loan market, which
has been effectively closed since March and is now likely to
"People thought the sanctions issue was disappearing in the
rear view mirror, but it isn't," a second banker said.
"This winds the clock back to two months ago and reminds
everyone that this is still a dynamic and expanding issue. I
think banks could come back from this with an even more
conservative approach to Russia," he added.
Although U.S. banks will be constrained by the new
sanctions, some European banks with significant relationships
with Russian borrowers are more bullish on continuing to lend.
"The sanctions will not have teeth for European banks ... We
are legally unaffected," a third banker said.
Other European banks are less optimistic that the effect of
sanctions will be limited to U.S. banks, which have billions of
dollars of Russian loan exposure.
"It is very premature to assume it can be business as usual.
Different institutions have different risk appetite ... but the
final impact of these new sanctions will take time to work
through," the second banker said.
European banks' risk appetite in such matters has been
dented by the experience of France's BNP Paribas,
which this month had to pay nearly $9 billion for breaking U.S.
embargoes against Sudan, Cuba and Iran. U.S. authorities are
also talking to Germany's Commerzbank and Deutsche Bank over
their dealings with blacklisted countries.
The new sanctions have also put a question mark over a $1.94
billion Rosneft-BP prepayment facility that backs the long-term
delivery of crude oil products between Rosneft and BP.
Banks, including Lloyds and HSBC, both of
which have been punished by the United States in the past for
sanctions violations, pulled out of the deal before it was
signed on June 27.
Lenders including Deutsche Bank, Societe General
and Bank of China funded the facility only a couple of
days ago. Some banks have now asked lawyers to look at the loan
agreement, which contains enhanced sanctions provisions that are
designed to protect banks.
"Lawyers are looking at it (the Rosneft-BP loan) at the
moment," the fourth banker said.
BP was not immediately available to comment.
(Additional reporting by Clare Hutchison. Editing by Tessa
Walsh and Will Waterman)