Friday, December 16, 2016

The calculations for “Rosneft” has kept the ruble – RBC

Photo: Reuters/Pixstream

Transfer in the budget of means from privatization of “Rosneft” has coincided with the growth of rouble-denominated borrowings of banks from the Central Bank. The authorities managed to develop a scheme to avoid sale of foreign currency earnings on the transaction and to support the ruble.

the Volume of REPO transactions of banks with the Central Bank on Thursday, December 15, amounted to 503 billion rubles — the highest level since the end of January 2016. In addition, banks greatly increased the volume of secured borrowings from the Central Bank for a period of seven days — from 55 billion to 250 billion. Analysts connect it with the deal on the privatization of “Rosneft”. “In our view, this is due to the fact that banks have accumulated ruble liquidity for payments to the budget from privatization of shares of “Rosneft”, — wrote in his review on Friday, analysts at Sberbank CIB.

Budget funded

In December, Rosneftegaz was to transfer to the Federal budget of funds received from the sale of 19.5% of Rosneft shares to a consortium of investors — the commodity trader Glencore and the Qatar Fund QIA. The total amount of transfers from the holding is 710,8 billion rubles, mentioned in the notes of the Agency. Early on the morning of 16 December, Rosneftegaz announced that all funds from the sale are accumulated in the accounts of the company and are preparing to transfer to the state budget. Later the head of “Rosneft” Igor Sechin reported to the President of Russia Vladimir Putin that the funds transferred to the budget. The Ministry of Finance confirmed that the money arrived in the budget in full.

the Situation looks so that when you transfer in the budget of money on the deal, “Rosneftegaz” has managed to avoid (or largely avoid) the sale of foreign currency received in the transaction, borrowing instead of rubles from the Central Bank through banks (directly non-Bank institutions, the Central Bank did not credit). “Large banks could raise funds in the Central Bank “Rosneftegaz” as the regulator did not credit the company. Problems with collateral from banks is not, because the banks ‘debts to the Central Bank at historically low levels” — the analyst of Raiffeisenbank Denis Poryvai. Conversion of such a large amount of currency for a short period of time would lead to excessive strengthening of the ruble, which would cause undesirable volatility in the future,” says Poryvai. At the same time, on the local market remains the shortage of foreign currency liquidity, despite the “Rosneftegaz” currency from a consor tium of Glencore and QIA

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bypassing currency

This method of calculation of “Rosneftegaz” with a budget allows you to avoid (or significantly reduce, depending on the exact structure of sources of funds, which is unknown) pressure on the current exchange rate of the ruble, which could provide the foreign exchange earnings from the transaction. According to estimates by Raiffeisenbank at the beginning of December 2016 on accounts from “Rosneftegaz” was about 544 billion rubles, that is, to pay off the budget, the company needed to take at least another 166,8 billion rubles, or exchange part of their foreign exchange receipts from sellers of rubles. In the second case, selling the currency in the market could affect the exchange rate.

Kept the ruble

In practice this did not happen. The Russian currency on the Moscow stock exchange on Friday, December 16, strengthened slightly: 17:09 GMT, the dollar fell by 18 kopecks to the previous day’s close, to 61.56 RUB, the company Informed representatives of the Central Bank and the government have repeatedly assured that the transaction would not affect the Russian currency market. 7 December, Russian President Vladimir Putin also said that the privatization of state-owned Rosneft, which resulted in the Russian currency market will be a significant amount of foreign currency, should not cause an undesirable jump in the ruble. “The financial market today goes a significant amount of foreign currency. And the money should arrive in the budget in rubles in rubles. So you need to devise a scheme that would not adversely affect the market, would not cause any jumps in the currency market,” Putin said at a meeting with the head of “Rosneft” Igor Sechin.

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However, the stability of the ruble during the period of settlements with the budget on the transaction of privatization of “Rosneft” takes the question of keeping the national currency only in the short term. Whether the effect is delayed, depends on how Rosneftegaz will use the foreign exchange earnings.

the Head of the Central Bank Elvira Nabiullina said that it intends to continue to keep the situation under control. The Bank of Russia conducts consultations with Rosneft to convert currency from privatization transactions has no impact on the currency market, she said at a press conference following the meeting of the Board of Directors of the Central Bank.

Other issues

Also in question, will suffer if, and if Yes, then who, exactly, is the loss on the transaction of privatization of “Rosneft” from-for changes of the Euro. The fact that the exchange rate on 6 December (the day before the first announcement of privatization) €10.2 billion paid by Glencore and QIA for 19.5% of Rosneft, consistent with 692,4 billion. But by 16 December (day of the announcement of carrying out all calculations on the transaction) due to the strengthening of the ruble privatiziruemih package is cheaper by about 33.3 billion RUB (up to 659,06 billion rubles) foreign exchange Loss may be incurred by the seller — “Rosneftegaz”, unless he is hedged, the change in the exchange rate, according to analysts of investment banks. Representatives of Rosneft and buyers of her shares Glencore and QIA — do not comment who covered this difference (33.3 billion rubles). Also, they are not informed of whether she did, as “Rosneftegaz” has not yet converted into Russian roubles foreign exchange earnings from the transaction.

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