Russian banks and industrial heavyweights, facing local funding strains and surging capital flight, will struggle to meet their borrowing needs in coming months and may need emergency state support should the euro zone crisis deepen and oil prices slump.
Facing a dearth of rouble liquidity, some borrowers are raising short-term cash in foreign currency while hoping a year-end spending splurge -- a tradition the government seems unlikely to break ahead of presidential elections next March -- will ease the local funding situation.
That view is backed by the central bank, whose first deputy chairman, Sergei Shvetsov, predicted last weekend that liquidity tightness would crest in mid-December.
But should the appointment of new governments in Greece and Italy as well as broader moves by policymakers fail to restore confidence in the euro zone, Russian borrowers may be caught out, bankers and analysts told Reuters.
For now, there is nothing catastrophic, but if the overall situation worsens, this will also impact Russia, said Andrey Shalimov, head of treasury and deputy chairman of the management board with Vozrozhdenie
Russia lacks a deep pool of institutional long money and appetite for rouble-denominated debt is vulnerable to swings in liquidity driven by oil prices and capital flows.
For now, the oil price is holding above the $108 per barrel factored into this year's budget, which is in surplus, enabling the government to lend cash on hand to banks.
EXPOSURE TO RISK
But capital flight has persisted, forcing the government to raise its forecast for outflows this year to $70 billion.
That's below the $130 billion that fled the country in the fourth quarter of 2008 as the central bank struggled in vain to avert a rouble devaluation, spending a third of its reserves.
Russian companies and banks then needed massive injections of state cash to tide them over, but even that was not enough to prevent the economy from contracting by a jarring 8 percent in 2009.
This time around, some capital flight has been driven by uncertainty over the path that Prime Minister Vladimir Putin will take after he runs for the presidency next March. Putin, president from 2000-08, is virtually assured of victory.
Bankers add that European banks are cutting back lending to Russia to shrink their balance sheets and boost capital adequacy as they write down their exposure to default-threatened Greece.
Central bank dollar-buying interventions to slow the slide of the rouble in August and September drained liquidity, forcing banks to borrow from the central bank's repo window.
A foreign debt redemption schedule for banks and companies of $32.5 billion in the fourth quarter is mild when compared to the obligations Russian firms and banks faced in 2008-2009.
Redemptions in the first quarter will fall to $18.9 billion but, with markets challenging, nervousness is palpable.
A CHRISTMAS GIFT?
Russian banks and corporates raised about $8 billion through bond issuance and loans in September and October, and are seeking $13 billion more in the coming months, according to Reuters estimates.
There is high uncertainty over what interest rate funds can be raised at in the future, and moreover there is local uncertainty, said Evgeny Nadorshin, an economist at Sistema
The last Russian firm to place a dollar Eurobond was steelmaker Severstal
Gazprom has also turned to the euro commercial paper market, raising two tranches worth $500 million -- although that was half the amount it had originally sought.
The hunt for foreign cash reflects tightness on the domestic market, where private-sector bond issuance fell to just 115 billion roubles ($3.8 billion) in the third quarter from 286 billion roubles in the second, according to Thomson One data.
Overnight interbank rates have hit two-year highs above 5.5 percent, reflecting hunger for cash that has led market leader Sberbank
There will be no money until budget spending in December. That's the whole intrigue, said Sergei Shepilov, head of treasury at Raiffeisen Bank
Troika Dialog reckons that 1 trillion roubles in finance ministry deposits at Russian banks will mature in the fourth quarter. If the government decides not to roll this amount over, it could lead to a serious liquidity deficit, Troika analysts said in a note.
STATE AS BACKSTOP
Should the global backdrop worsen, borrowers expect policymakers to ensure that Russia does not experience a full-scale banking crisis or wave of corporate defaults.
The state has the tools it needs to support market liquidity -- tools that were already tested in 2008-2009, said Ekaterina Trofimova, first vice-president at Gazprombank and a former banking analyst at Standard & Poor's.
The central bank carefully monitors the liquidity situation as a whole and in individual banks, which should be enough to facilitate a rapid response.
Russia, analysts say, has the balance sheet to come to the aid of distressed private-sector borrowers, with sovereign debts of 10 percent of GDP and foreign reserves of $518 billion.
Of Russia's two sovereign wealth funds, the $26.4 billion Reserve Fund provides fiscal insurance. The government plans top-up payments to double the Reserve Fund's size by year-end.
Should oil prices slump, Russia would need to raid its stash to stave off a full-blown credit crunch and economic contraction that, officials say, would result if oil prices fall to $60.
But, as long as oil stays above $100 we have nothing to worry about, said Vozrozhdenie's Shalimov.
(Additional reporting by Andrey Ostroukh, Editing by Douglas Busvine, John Stonestreet)