* Bankers wait to see developments in Ukraine crisis
* Billions of dollars of loans on hold
* Vimpelcom, Uralkali, Sibur among companies affected
* Bankers already reviewing loan terms and conditions
By Sandrine Bradley
LONDON, March 13 The Russian syndicated loan
market has ground to a halt, putting billions of dollars of
loans in the pipeline on hold, as banks await the political
fallout of a referendum in Crimea and possible economic
sanctions on Russia, bankers said.
Russian companies, including mobile phone operator VimpelCom
and Uralkali, the world's top potash producer,
are now facing potentially higher borrowing costs when lending
resumes. That is adding to the risks for Russia's economy as it
is threatened with U.S. and EU sanctions if Sunday's vote in
Crimea on whether to secede from Ukraine and join Russia goes
Nearly 20 new loans for Russian companies were in process in
early March and talks were advanced on $5.5 billion of new
loans, including a $2 billion three-year loan for VimpelCom, the
country's third-biggest mobile operator.
International banks are dragging their feet on loan
commitments, including deals already approved by banks' credit
committees, bankers said, as they try to buy time to gain
clarity on the rapidly changing political situation.
Commitment deadlines on at least one major loan were not met
last week after only two of the 10 banks invited had responded
by the deadline, bankers said on Friday.
"Banks are saying that they're still open but they are not
doing any business. Primary Russian deals are on hold," a senior
As well as VimpelCom, other Russian companies with loans of
up to $1 billion in progress include petrochemicals firm Sibur
Novolipetsk Steel (NLMK) and iron ore
producer Metalloinvest. Uralkali is seeking a $500
"No-one in their right mind is going to ring up a client now
and say they are good for the money, the client doesn't even
expect that," a second senior banker said.
Russia shipped more troops and armour into Crimea on Friday
and repeated its threat to invade other parts of Ukraine,
showing no sign of listening to Western pleas to back off from
the worst confrontation since the Cold War.
The rising tension sent Moscow's stock market plunging 5
percent before clawing back some losses and Russian debt
insurance costs surged to a near two-year high. Some analysts
say Russia's economy could slide into recession if sanctions are
Bankers are taking a 'wait and see approach' to repricing
agreed loans until the implications of the political situation
are clearer. But they are already reviewing terms and conditions
and are building extra protection into the loan documentation to
cover the possibility of economic sanctions.
International banks have been discussing including Russia in
existing economic sanction clauses that were originally put in
place to deal with Iran, Libya and North Korea.
The sanction clauses are based around the legality of
lending once economic sanctions have been imposed and allow loan
agreements to be cancelled if that happens.
"No one is signing any documents without the inclusion of
U.S., U.N., EU and UK sanctions protections. This has been in
standard documents for a while but the Russia situation has
highlighted the case for including all Russian names," a third
senior banker said.
Banks are also concerned that there could be a clampdown on
U.S. dollar payments if sanctions are enforced, as most
internationally syndicated Russian loans are denominated in
"Banks are getting nervous about what might happen. I don't
think institutions have views yet as it's all evolving," a loan
syndicate head said.
Russian loan pricing had been falling for the last 12
months, reflecting growing interest by international banks in
lending to Russia, and borrowers such as Sibur and Uralkali had
been initially seeking to beat Gazpromneft's benchmark
pricing of 150 basis points (bps) last December.
Borrowing costs are almost certain to rise now after
Russia's aggression in Ukraine, bankers said.
"There is no point repricing if you don't know how this is
going to play out. Are you repricing to the crisis and sanctions
or a more moderate level?" the loan syndicate head said.
(Editing by Tessa Walsh and Susan Fenton)