Egypt to Turkey Gain From Putin Sanctions as Banks Divert Loans

By Sally Bakewell  

Banks are diverting lending to companies in Africa and central and eastern Europe as they seek to replace business lost amid sanctions on Russia, according to BNP Paribas SA and Bank of Tokyo-Mitsubishi UFJ Ltd.
Russia’s international isolation over the conflict in Ukraine has discouraged lending by foreign banks, with one loan offered to the nation’s borrowers so far this quarter, according to data compiled by Bloomberg. European Union governments remain split on further sanctions as investors meet at Euromoney Seminars’ 11th Annual Syndicated Loans CEE Conference in Vienna.
“That liquidity is looking to find a home,” Peter Hanrott, Bank of Tokyo-Mitsubishi’s London-based head of loan markets for Europe, Middle East and Africa said on
a panel at the conference. “The shift has been away from Russia and down towards Africa,” with banks turning to countries such as Egypt and Nigeria as well as Turkey, he said.
U.S. and European leaders are considering new or broader sanctions on Russia because of the escalating conflict in Ukraine. Penalties imposed on some of the country’s defense, energy and financial companies including OAO Sberbank and VTB Group since July already restrict them from accessing international capital markets.
The measures are also deterring lenders from non-sanctioned business as people err on the side of safety, Andrew Moses, London-based head of loan syndicate and sales at KBC Bank NV, said in an interview Nov. 7.

G20 Meeting

“In the short term, there will be a desire to diversify into other markets from Africa to other countries in the CEE region,” Helen Guillemot, head of syndicate for energy and commodity finance in the EMEA region at BNP Paribas, said at the conference.
Russian President Vladimir Putin is meeting with leaders from the Group of 20 nations in Australia this weekend amid evidence that his tanks, artillery and troops are entering Ukraine. British Prime Minister David Cameron cited the prospect of a new Cold War in a speech in London on Nov. 10.
The closing of the Russian market “for the foreseeable future means a likely continued shortage of loan paper compared to demand,” said William Sharpe, the managing director for international loan syndication at Natixis SA in Paris.
Hungarian oil and gas company Mol Nyrt. said Oct. 31 it agreed to a refinancing deal of more than $1.5 billion at pricing “reduced significantly,” after initially considering a $650 million transaction, Vera Szaz, head of funding at the company, said in comments e-mailed on Nov. 7. The sanctions have created a “liquidity surplus to be absorbed by other quality corporates,” Szaz said.