What to expect from Russian issuers during the crisis?

Favorites and outsiders: which of the bond issuers may be at risk due to another shock in the economy

Author:  1top.company

What effect will the exacerbation of the situation with the coronavirus , the continuing drop in oil and the  devaluation of the ruble have on Russian business  , which industries will suffer the most, what to expect from banks and  leasing companies , how are retailers and  developers going through the crisis and what is happening at the moment for the  issuers of HDI . They asked about this from the analysts of the rating agencies and from the borrowing companies themselves.


✔ What will happen to the economy?

✔ Business and crisis: who is under attack?

✔ What to expect from banks?

✔ Is cheap oil not a hindrance to oilmen?

✔ Rush demand: retail breaks the bank?

✔ Leasing won’t take off?

✔ Devaluation of the ruble: are developers in the black?

✔ How are HPO issuers doing during the crisis?

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What will happen to the economy?

The main difference between the 2020 crisis and the shocks of 2008-2009 and 2014-2015 is that the problem was caused not by the financial system, but by the real economy , analysts and economists agree. Despite the fact that the financial sector has approached the current crisis sufficiently prepared, it will obviously not be possible to avoid an economic downturn.

According to ACRA analysts , the Russian economy will be able to show growth from -0.2 to 0.6% in 2020 (previously the agency had predicted 0.8%). This is provided that the Bank of Russia will not allow a liquidity crisis in the banking system, and the economy will receive timely support from the budget. Inflation during 2020, according to the rating agency’s forecasts, will not exceed 7%. At the same time, the Bank of Russia may still resort to raising the key rate .

In the “Expert RA” sees two scenarios for development of the situation in 2020 – is moderately negative and crisis.

Which scenario the Russian economy will choose will be decided in the next one and a half to two months, according to Expert RA.

“A vote for amendments to the Constitution is scheduled for April 22 , after which the Bank of Russia will most likely stop“ burning ”funds to maintain the ruble and thereby restrain social tension,” says Alexander Saraev. – In addition, at the end of April, the market will be able to assess the decline in oil demand, depending on the slowdown in global economic activity amid the fight against the virus, as well as the impact of the increase in oil production since April 1. If there are no new agreements to resume the OPEC + deal , oil prices will face another period of decline, as a result, it will become economically unprofitable for the Bank of Russia to maintain the ruble exchange rate in the current price range, as this will rapidly deplete reserves. Refusal fromForeign exchange interventions against the backdrop of weak oil prices will lead to a significant depreciation of the national currency and activate the conditions for the onset of a crisis scenario, which we expect to come true with the average annual price of Brent crude below $ 35 per barrel.

Business and crisis: who is under attack?

– The greatest damage from current events will be received by companies with foreign currency debt without foreign exchange earnings and with short debt, as well as companies from industries directly affected by the consequences of the coronavirus pandemic , such as tourism and air transportation, – comments Philip Muradyan, junior director of corporate ratings at Expert RA “ . – The majority of large Russian companies currently have a balanced foreign exchange position and debt repayment profile and are able to compensate for a temporary decrease in operating flow by reducing capital expenditures and dividends.

“Most Russian companies have approached the beginning of 2020 with a moderate level of debt burden ,” agrees Dmitry Orekhov, managing director of the NKR rating agency . – But due to the negative impact of the coronavirus and commodity prices on the economy, the oil and gas industry is expected to increase its debt burden and adjust capital investment programs. The steel industry will be under pressure from falling demand in the steel-consuming industries. The coronavirus pandemic could hinder the supply of base stations and equipment for 5G networks and delay their launch in Russia. The transition to escrow accounts will lead to an increase in the credit burden of housing developers. Petrochemical companies will maintain moderate indicators of debt burden due to low production costs and a significant difference in the price of final products and crude oil.

“Most of the companies in the field of passenger and cargo transportation will be under the blow of the crisis ,” continues Alexander Saraev. – We include airlines among the first(including due to the need to continue foreign currency payments under lease agreements against the background of falling traffic), airports (Domodedovo is already transferring part of its employees to 1/3 of the salary), travel companies and the hotel business. The second group includes companies engaged in the transportation of coal and oil and, on the whole, focused on import-export in their activities, the dynamics of which is poorly predictable today. The service sector and the catering system will also suffer, and landlords will certainly face problems. The short-term winners will be retail, which is increasing sales in conditions of panic, as well as carriers within large cities (taxi and delivery services). Pharmaceutical companies and pharmacy chains may benefit in the short term from the sale of masks, antiseptics and increased online sales.

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– Airlines find themselves under a double blow: foreign popular foreign tourist destinations are closed, due to the regular discussion of restrictive measures inside the country, domestic tourism is cut off, enterprises of all levels are canceling working trips, – adds Igor Smirnov, Director of Corporate Ratings at Expert RA… – In the meantime, the rate hits the air carriers also through currency leasing. It is impossible to cancel some flights so as not to lose slots, but unperformed flights allow you to save only on fuel – leasing is still charged, and the crew needs to be paid salaries, and you also have to settle accounts with home airports. The state has not yet offered effective methods of support. Outside of explicit budget support, the source is seen as leasing benefits from state leasing companies and relief on loans issued by state banks, but this raises the question of how much of such support / loss they can absorb.

Railway operators are also under pressure.

– First, due to the expectations of a recession , and later because of the actual recession, the global demand for industrial raw materials, materials and fuels is decreasing. Metallurgists, coal miners and oil workers transported less cargo already at the end of 2019, but if before that export was mainly affected, now domestic consumption will also decrease, ” explains Igor Smirnov. – The currency jump is positive for exporters, but it will not directly affect the carriers – their foreign exchange earnings are minimal, while there are no foreign currency borrowings. However, it should be borne in mind that the industry is also under pressure from internal factors: from the second half of 2019, the supply rate for the most massive type of rolling stock – gondola cars – has been decreasing amid a decrease in loading on the network and an oversupply of production of new cars (together with low rates of write-off of the old train ), this poses especially high risks for the credited operators.

What to expect from banks?

If the peak stress of 2008-2009 repeats, the Russian banking system may show a loss of about 800-900 billion rubles, the NKR calculated . True, in the most likely scenario of the development of the situation, the banks will still be able to avoid consequences comparable to the shock of 2009, for several reasons at once, analysts of the agency believe.

First, banks have significantly reduced the volume of foreign currency lending(86.2% of total capital as of 01.01.2020 versus 113% as of 01.09.2008). At the same time, most of the foreign currency loans are now provided to borrowers with foreign currency earnings. Secondly, the volume of debt of the banking and non-financial sectors to non-residents on loans has noticeably decreased – from $ 375 billion as of 01.07.2008 to $ 156 billion as of 01.10.2019. Third, there has been a general decrease (in some sectors – persistence) in the debt burden of companies over the past 3-4 years. Fourth, in recent years, banks have, in principle, been able to accumulate rich experience in dealing with crises. And finally, a big plus for the system is that since the recent crises, the Bank of Russia has seriously tightened regulation of the sector, thanks to which it has managed to withdraw from the market or sanitize a significant number of financially unstable banks.

Nevertheless, during the current crisis, Russian banks will objectively have to face a drawdown in profits, analysts of Expert RA believe. This is due to the negative revaluation of securities among players with a large trading portfolio, as well as to the loss of income due to a decrease in lending against the background of increased risks in the economy. The decline in income will be especially strong in unsecured lending , which has acted as a driver in recent years. In addition, a decrease in banks’ risk appetites will lead to a decrease in re-lending and refinancing, which, in the context of a decrease in real incomes of the population, will cause an increase in the default rate of retail loans.and, as a consequence, the formation of provisions. Therefore, the third blow for banks will be the deterioration of asset quality.

– Players with a weak capital stock will be at risk (a number of them have already violated standards with premiums in 2019), but in general, we assess the stability of the banking sector to the upcoming test of strength as higher than in the crises of 2008 and 2014, during largely due to the clearing out of the sector from weak players, as well as an increase in the sector’s concentration on state-owned banks, whose share today forms the backbone of the banking system, – agrees with his colleagues from the NKR Alexander Saraev. “Therefore, when their financial situation is threatened, we expect the allocation of additional resources to ensure uninterrupted operation. In addition, in our opinion, the largest private banks can count on such support.that are either systemically significant or socially significant from the point of view of a high share in liabilities of individuals and SMEs.


– Obviously, the effect of the current crisis will be moderately negative for most large banks. Russian banks have a high level of liquidity and capital and have an adequate margin of safety in the event of external shocks. Banking regulation in Russia is stricter than, for example, in European countries. Therefore, Russian banks are better prepared for the crisis.

The most critical factor is the situation with the coronavirus. Aggressive quarantine measures to combat the virus suppress and, in some countries, even paralyze economic activity. At the same time, the government and the Central Bank are taking serious measures to contain the negative consequences, provide benefits for the financial system and the most affected industries.

In recent years, the Russian economy and banking system have adapted to the dramatic changes in external conditions. Fiscal rule will reduce the dependence of the ruble on oil prices . Substantial foreign exchange reserves , low external debt, current account surplus and balanced budget support the resilience of the Russian financial system. This year it is expected that the economy will be supported by increasing budget expenditures .

I think that investors in large Russian banks (top 50) should not worry. The Central Bank and banks are actively working to minimize the consequences of external shocks. At the same time, investors should, if possible, hedge investment risks, follow the development of the situation on world markets, statements of management and the reporting of the respective issuers.

For Sovcombank , the crisis years have always been the most successful in the past. We hope to continue this tradition. Of course, we will not comment on specific plans. Like previous crises, we meet this one with a maximum capital supply. We have recently raised $ 200 million in equity from a consortium of sovereign wealth funds led by RDIF . They also placed subordinated bonds for $ 600 million in total twice . A huge liquidity reserve has been formed. Patiently, but with full readiness, we are waiting for the right point to realize all the opportunities presented by the crisis.

Of course, all types of assets without exception will suffer from the crisis; those who have less risk than competitors will win. We have one of the highest shares of secured loans in retail among large banks. In the corporate and investment business, the overwhelming majority of our borrowers are the largest corporations with revenues of over 50 billion rubles. in year. Summing up, I will say that we definitely see more opportunities for ourselves than threats. But you have to sweat. It will be interesting.

Is cheap oil not a hindrance to oilmen?

The decline in oil prices is primarily a blow to the federal budget, and not to oil companies , believes Alexander Shurakov, director of the corporate ratings group of the NKR agency . From the point of view of Russian companies, taxes account for a significant share in the oil price, this share is variable and depends on the “proximity” of the average monthly Urals oil price to $ 15 per barrel. Russian oil companies can maintain positive operating profit even in the context of sufficiently low oil prices, but subject to maintaining the volume of export supplies. The situation could worsen significantly if Russian companies are forced to reduce their export volumes due to the inability to sell oil on foreign markets even at such low prices.

“In oil production, the drop in oil prices will be significantly amortized by the specifics of taxation, as well as the depreciation of the ruble, so problems can arise only for heavily credited companies with short debt and limited refinancing opportunities,” says Philip Muradyan from Expert RA. – In oil refining, due to a decrease in the ruble price of a barrel, the logistics subsidy will decrease, and a number of refineries may become unprofitable. The most technologically advanced refineries selling fuel on the domestic market will have an advantage . Stable fuel prices at filling stationswill act as a kind of hedge, which, nevertheless, will lose its force somewhat due to the need to pay fines to the state on the damper. As always, the most difficult situation in terms of credit risk in the oil sector will be with independent refineries, whose potential losses cannot be subsidized by production.

Rush demand: retail breaks the bank?

Rush demand for food in March will have a positive impact on the results of retailers for the first quarter, believes Mikhail Ganelin, senior analyst at ATON . And although it will not last more than 2-3 weeks, the positive effect will most likely be longer due to quarantine and self-isolation measures. The quarantine will likely result in an increase in household food consumption. In addition, accelerating inflation could help the sector’s revenues. The main risk for the sector remains the closure of shopping centers due to the introduction of quarantines, which will cause an outflow of buyers to smaller formats and online.

“In the context of the spread of coronavirus and the announcement of quarantine, sales of grocery retailers will grow significantly, but the increased demand will also require additional costs for the formation of stocks, logistics and wages,” warns Mikhail Tkach, junior director of corporate ratings at Expert RA… – The increase in sales can be decomposed into two components: the general excitement around long-term storage goods and a sharp decline in consumption in public catering places with the redistribution of household spending in favor of grocery retail. The first factor has rather a deferred effect, since, having bought for future use, people will consume the accumulated stocks during the period when the situation stabilizes. The second factor is more significant for retail chains and undoubtedly plays into their hands.

In recent years, consumer preferences have changed a lot. People began to cook less often at home and more often visit catering places or order delivery. Accordingly, retail chains competed not only with each other, but also with the service sector in the form of fast food restaurants, cafes and finished products. In connection with the coronavirus pandemic, most of the population will prefer to refrain from visiting public places, the level of confidence in the delivery of ready-made food will also decrease, therefore, at least for a period of uncertainty and the fight against the virus, grocery chainswill receive additional income. During the current agiotage, prices, in particular, for essential goods are unlikely to rise much, since they are under the special supervision of state bodies. In addition, based on the comments of manufacturers and retail chains, the problem of a shortage of goods seems to be nothing more than far-fetched. Currency fluctuations can put pressure on prices. If the depreciation of the ruble does not bounce back, then soon the food inflation will gradually accelerate, but still at a slower pace than in 2014–2015. Growth in food inflation, as a rule, has a positive effect on the financial condition of retail chains.


– The situation with the coronavirus, the continuing drop in oil, the devaluation of the ruble in aggregate, of course, have an impact on retail, but compared to other industries, our risks are not so high: the need for food is the last to decrease among consumers. For “Azbuka Vkus” as a retailer, whose imports are more than 50% in the assortment and 45% in the turnover, the currency factor is the most critical. To minimize its impact, the company uses hedging instruments .

One of the risks that we are seeing now is the risk of disrupting the stability of import supplies due to the unprecedented decision of the European Union to close the borders for one month. We have sufficient accumulated stocks in the central warehouse, and we are making efforts to expand the range with imported goods from distributors, we expect that both of these factors together will help with minimal losses in the breadth of the range to survive the period of border closures.

The premium segment of grocery retail is less sensitive to price increases than the mass segment , but more susceptible to assortment changes. Our target audience (not necessarily high-income buyers, but also middle-income customers who like to delight themselves with something tasty in a pleasant environment at a comparable price) is less sensitive to price. According to NPS polls, about 30% of buyers are dissatisfied with current prices, but they do not plan to give up their usual purchases.

We are not planning any sudden price movements, although it will hardly be possible to avoid price changes at the current exchange rates. We have a high share of imported goods in circulation, which directly depend on the exchange rate, but for all local suppliers contracts are in rubles, and we will restrain price increases for as long as possible using the mechanisms of contractual conditions.

With regard to the exclusive imported assortment, the question is that the retailer will either raise the price on the shelf following the increase in the purchase price, or will not be able to ensure the availability of this product on the shelf. If we cannot contain price increases from suppliers, then we will have to raise shelf prices to ensure product availability and not narrow the range that sets us apart from the rest of the supply on the market. For a mass assortment that depends on currency, we will raise prices no faster than the market.

We do not forecast a sharp drop in demand. Based on the experience of European countries that are ahead of us in the scenario of the coronavirus epidemic by weeks or months, we see that grocery retail, along with pharmaceuticals and pharmacies, remains one of the few businesses that are resistant to current circumstances.

Over the past few weeks, due to the excitement, we have seen a sharp increase in demand and exceeded daily sales targets by 150–300%. In the future, we expect a systematic decrease in activity, but overall the effect for retail is rather positive. In addition, quarantine measures facilitate the recruiting of new customers to online sales channels (av.ru online store, mobile applications, delivery of groceries and ready meals through partner services).

Our investors definitely shouldn’t be worried. Against the background of a large-scale fall in markets, rising costs and the threat of bankruptcy of companies whose goods and services people stop using during quarantine, bonds of food retail companies are now perhaps one of the most reliable securities.

Azbuka Vkusa is ready for crisis scenarios and will be able to get out of them with minimal losses. In 2008 and 2014, the jump in the exchange rate was more noticeable, but the revaluation of the imported assortment did not lead to a tragic outflow then, and will not lead to now.

In non-food retail , amid uncertainty and the current depreciation of the ruble, all deferred demand will rush to make the planned purchases now, this will lead to high performance in the first quarter of the year, Mikhail Tkach is sure:

– The further situation will depend on the level at which the ruble exchange rate is fixed, as well as on the pricing policy of manufacturers. It is worth noting that, compared to the 2014 crisis, the population’s debt burden is now higher, and some markets were under pressure in 2019 even without external shocks due to low purchasing power . In 2019, a decrease in sales was recorded in the fashion segment and in the market for new car sales , while the market for household appliances and electronics slowed down from 17% to 3%. If the depreciation of the ruble does not recoup and the entire exchange rate difference is passed on to the end consumer, then the situation will only worsen and lead to the departure of some of the players.


– The depreciation of the ruble has significantly increased the demand for cars . Buyers are afraid of rising prices and are eager to buy a car before the likely price increase. Demand growth is observed in all market segments, but to the greatest extent – in the premium class.

This is a classic customer behavior during a period of sharp devaluation. Anyone who was going to buy a car in the foreseeable future, quite rightly believing that prices will rise, are simply accelerating the realization of their goal.

I think that a similar situation with demand is observed now with many dealers. The whole question is how much they will be able to satisfy it, whether they have enough cars, working capital , credit limits, and so on. After all, it is not only the possibility that is important, but also the availability of tools for its implementation.

For the automotive retail, a very important competitive advantage is the liquidity supply . For us, this situation creates understandable advantages: we have a sufficient supply of liquidity, which allows us to quickly buy out additional volumes of cars and satisfy the emerging demand.

At this stage, it is quite difficult to assess the long-term risks for the automotive industry and auto retail associated with the spread of the coronavirus. In such conditions, it is difficult to make long-term forecasts, since many factors can affect their implementation. One thing is certain: cars will rise in price – both new and used.

In the moment, we feel quite comfortable. If the situation with the coronavirus and increased volatility in the foreign exchange market continues to drag on, then there are two main risks for us: the risk of a deterioration in effective demand as a result of devaluation and the risk of an increase in interest rates.

So far, we believe that there are no obvious macroeconomic drivers for the Central Bank to raise the rate. Then the question arises, which everyone is now asking each other: what will the Central Bank do next – support the ruble or support the business? From the point of view of logic, it would be more correct not to raise the rate.

If the regulator nevertheless raises the rate, this will certainly create some discomfort for us: firstly, loans will become more expensive for us, and secondly, this may negatively affect the situation with car loans .

But I would like to emphasize again, these two risks exist today for any economy, for any business and have no direct relation to the creditworthiness of Rolf .

Everything is good inside the company: we have a working strategy, a strong team that can work in crisis and rapidly changing conditions. Some of the employees have already been transferred to remote work, this scheme works. If new car sales fall, this will be offset by used car sales. If the secondary market falls, we are left with a service that brings about 70% of EBITDA for the company. There is an important indicator – the service coverage ratio (SPR), which shows how much the conditionally fixed costs of the business and debt service are covered by the income generated by the business with low elasticity to the main market, that is, by the service. At the end of 2019, Rolf’s SCR is 124%. In this respect, we are very resilient.

At the same time, the company continues to diversify its loan portfolio by opening new limits. This allows us to mitigate liquidity risks. In addition, an additional hedging of liquidity risks is substantial reserves in the form of account balances and a reasonable debt burden – at the moment the company’s net debt / EBITDA ratio ranges from 2.5x ~ 2.8x. This is an absolutely comfortable indicator. We regularly monitor the situation, and also exchange information with our partners. Now the business has switched to manual control in order to make decisions as quickly as possible in a changing situation.

Yes, there is a strong decline in prices on the bond market . Rolf’s papers are no exception. But in our case, the only reason to worry about Rolf’s bonds may be finding the right moment to buy off more of the company’s securities at an attractive price.

Leasing won’t take off?

Leasing in Russia today is one of the instruments for financing fixed assets of companies. Namely, long-term investments may be most affected by the expected decline in economic activity amid the spread of the coronavirus, Mikhail Doronkin, director-head of the NKR Agency’s bank ratings , is convinced .

“It is safe to say that the leasing industry will face a reduction in the number of new contracts, and there is a high likelihood of cancellation or temporary suspension of certain existing contracts,” he concluded.

– If 2019 was characterized by a decrease in lending rates and an increase in funding for leasing companies against the background of the strengthening of the ruble, then this year the situation will be in many respects diametrically opposite, – stated Alexander Saraev. – Therefore, based on a moderately negative scenario, we expect a drop in new business volume by 5-10%.

According to Doronkin, the aviation leasing segment may find itself in the most difficult situation , since due to a drop in demand, the operating flow of Russian airlines will sharply drop this year, and it may take from several months to one year to restore it to the pre-crisis level after the opening of the borders.

– The weakening of the ruble and restrictions on flights will put pressure on the volume of passenger traffic, which will ultimately lead to an increase in losses for airlines and freeze their plans to expand and update their air fleet, explains Saraev. – In this regard, the dynamics of aviation leasing will be weak this year, however, relative to the base of 2019 (the lowest in the last 7 years), we expect a slight recovery (at least + 5%) due to the closure of transactions begun last year.

The railway segment will continue to shrink due to a further increase in rolling stock surplus due to a drop in loading on the Russian Railways network (-2.8% in January-February 2020 against the same period last year). The main reason for the decrease in loading is largely a drop in demand for key cargoes – coal (-8.4% in January-February this year), as well as oil and oil products (-2.1% over the same period). The reduction in loading will intensify amid the COVID-19 pandemic, as well as the rupture of the OPEC + deal and the exacerbation of the price war in the oil market. In addition, the drop in rental rates amid rising operating costs will also provoke a decrease in demand for gondola car leasing from customers. As a result, the railway leasing segment will shrink by 40%.

However, not only railway and avilising, but also retail segments are at risk, Mikhail Doronkin believes. In particular, the transfer of employees to remote work and the minimization of business meetings will negatively affect the demand for cars, and a decrease in the volume of cargo transportation will hit the dynamics of truck leasing.

– The market driver – car leasing – will find it difficult to show growth rates of more than 5% due to the continuing decline in sales of both trucks and cars, which, without taking into account inflation, will correspond to near-zero growth, – the representative of Expert RA predicts. “At the same time, even the rise in the cost of an average car, including due to an increase in the utilization fee, will not be able to compensate for the volume of new business against the backdrop of a decline in leasing sales. A short-term surge in demand for car leasing may be due to the volatility of the ruble due to expectations of a further rise in the price of cars, and in case of an increase in their volume, government subsidies will support the market, but will not reverse the negative trend.

If we talk about individual players, then the greatest risks are concentrated in large corporate segments (railway, air, water transport), Saraev believes.

True, the majority of players in this segment are state or near-state structures. Such as STLC , which is 100% owned by the Ministry of Transport . In 2018, the company became the largest in terms of leasing portfolio in Russia. And for the first nine months of 2019, she received 2.3 billion rubles. net profit under IFRS.

“We do not expect major bankruptcies among retail players, since they have a lot of experience working with cars during the crisis,” Saraev is convinced. “In addition, a number of leasing companies can count on the support of parent structures.

However, Expert RA warns that in the event of a crisis scenario, the reduction in the volume of new business of leasing companies by the end of 2020 may amount to more than 20%, and its absolute size will not exceed 1.2 trillion rubles.

Nevertheless, as economic activity recovers, it is the retail leasing segments that will be the first to show growth, Doronkin summed up.


Maria Selyutina, investment manager of the RESO group

– Now we are seeing an increased demand for cars. After some time, a drawdown in demand is likely to follow. In addition, defaults are possible for certain representatives of small businesses. However, all this will form subsequently deferred demand, as it was already in 2015.

Certainly, some of the players in the leasing market may experience serious problems. The highest risks in the current situation arise from leasing companies operating on low margins, with illiquid assets and a large debt burden.

In our opinion, RESO Leasing has the best situation in the industry today: the lowest debt burden, the highest marginality and the most liquid portfolio.

The main risk for us today is that we will not grow by the planned 40%. But this only means that then we will be able to ensure higher growth rates. Just like in 2014, we see interesting opportunities for ourselves to take advantage of the situation and increase market share at the expense of competitors.

Devaluation of the ruble: are developers in the black?

The experience of the past strong devaluation of the ruble at the end of 2014 showed that in the short term, developers only benefit from the panic in the financial markets and significantly increase their sales, emphasizes Dmitry Sergienko, Senior Director for Corporate Ratings at Expert RA . In order to preserve depreciating savings at the beginning of the crisis, the population actively begins to buy apartments. However, the surge in sales in the short term will have a negative impact on the demand for apartments.in the medium term, which will affect projects that will be launched only in a few months. Almost half of the apartments are currently sold using mortgage funds, so the demand will also be influenced by the behavior of banks: at what interest rates they will be able to issue new mortgage loans . Taking into account the transition to project financing, developers are forced to raise prices for apartments . But in combination with a potential decrease in demand in the medium term due to the crisis, developers will find it problematic to shift their increasing costs to consumers.

– First of all, those participants in the construction market who have a high share of imported components in the cost price will be significantly affected; as a rule, these are developers involved in the segment of elite real estate and business-class real estate, – believes Alexander Divakov, director of the corporate ratings group of the NKR agency . – In addition to the risks of higher costs, there is a high probability that part of the effective demand may go to the cheaper segments “comfort” and “economy”.

In general, the situation in the residential real estate market , according to Divakov, will largely depend on how quickly the problem with the coronavirus pandemic is resolved. If it starts to decline in the next 1-2 months, it is likely that the volume of real estate acquisitions will decrease by 5-10% in the second quarter of 2020. In a more pessimistic scenario, anti-virus measures will last until August-September 2020, which means that the decrease in demand from the population due to the prolonged drop in incomes in many sectors of the economy, in which most of the economically active population is involved, will be more significant. In the 2nd and 3rd quarters of 2020, it can reach 20% or more.

– Large market players with a sufficient margin of safety and flexible cost management will be able to cope with negative changes in the economy without significant adjustments to the planned sales volumes, but many medium and small players, especially in regions with weak effective demand, may go bankrupt. In addition, much will depend on measures to support the construction industry by the state, such as subsidizing the interest rate on loans for project financing , concluded the NKR representative.

How are VDO issuers doing during the crisis?

Denis Zaitsev, CEO , Royal Capital :

Now Royal Capital has three issues of exchange-traded bonds in circulation, totaling 150 million rubles. But despite the devaluation and crisis, the company has no defaults, and we see no prerequisites for this. In case of default of the lessee , we have worked out a mechanism for prompt withdrawal of the car.

Devaluation does not pose immediate and rapid risks to the company. All car sales in Russia , including direct imports, are carried out for rubles. Manufacturers and importers bear the exchange rate risk. They hedge this risk better than their smaller dealers. In the ruble price, a few percent is immediately laid on the volatility of exchange rates, this allows not to sharply increase car prices.

Usually, a fall in the ruble leads to a surge in sales. The next few weeks will see an increase in sales of cars that are sold at old prices, and dealers will be provided with liquidity.

The new car market has been at its lowest point for several years – 1.4–1.6 million cars sold per year. Below this level, a country as large as Russia can fall only in the event of a complete collapse of the economy.

A significant number of new cars have a very high degree of localization in production, which allows manufacturers to maintain ruble prices for a long time. An additional effect of the devaluation is an increase in the export of cars assembled in Russia, which also supports manufacturers.

Recently, dealers in the Moscow region are beginning to feel a decrease in the volume of good used cars, that is, the Russian car park is aging, and the choice in the secondary market is narrowing. This reinforces the pent-up demand for new cars.

Oddly enough, the panic around the coronavirus may help new car sales to some extent. Some potential buyers may opt out of car sharing and return to their own car.

Viktor Shevchenko, CEO and owner of Tradeberry (TM Tastes of the World):

– From a purely human point of view, I am not happy with the crisis situation, but from the point of view of business for food companies this is the finest hour. And the point is not even that products with a long shelf life are swept off the shelves, but it is much more valuable that, against the background of the excitement, retail chains are more willing to include such products in their assortment.

Back in 2019, we set ourselves the goal of increasing the share of Russian-made products. As a result, today the company can quickly transfer the main product line from imported assortment positions to Russian ones.

At the moment, we have 38 assortment positions, 4 more are being prepared for launch, and in total, by the end of the year, their number may reach 55.

All new products launched in 2019 are manufactured in Russia. Last year, the share of imports fell from 70% to 58%. The main deliveries are made from Thailand. Chestnuts are produced in China, and shipments resumed in March after the end of the Chinese New Year. The gross margin on imported products is 80–90%, so part of the margin can be donated.

After the introduction of new products by the end of 2020, the company plans to reduce the volume of imports by up to 30%. Warehouse stocks are formed at the required level, and there are enough of them for smooth operation in the next three months.

Tastes of the World is available in 15,000 stores throughout Russia. But we are actively working on expanding the geography of sales and developing the export direction. Today “Tastes of the World” is already available to buyers of Belarus and Kazakhstan, Armenia, Israel and Canada will soon join them.

In addition to classic retail , Tradeberry is actively developing Internet channels: we signed contracts and started shipping to Ozon, Goods, Utkonos, Beru. We are also thinking about collaborations with coffee houses (visitors to Shokoladnitsa and Traveler’s-coffee this season order coffee-raff with our coconut chips), develop new recipes together with the chefs.

At the end of last year, the company strengthened its team: Vadim Dolgov, who previously held the post of President of the Azbuka Vkusa company, came to the position of Adviser to the General Director for Strategic Development.

“Tradeberry” is not planning new loans in the next six months, as the company is provided with the necessary working capital for the implementation of its tasks.

Alexey Vesnovsky, managing partner of the Lombard Master chain :

– Now the Lombard Master chain has commercial and exchange-traded bonds totaling 400 million rubles in circulation .

The current crisis creates an increased demand for the company’s services – small and small businesses, which form the basis of the client base, are looking for quick ways to close cash gaps. Over the past few weeks, the demand for network services has skyrocketed. According to our estimates, the unsatisfied demand for large lombard loans reaches 200 million rubles.

Lombard Master does not issue unsecured loans, only secured by liquid assets. Yes, in the current environment, we expect an increase in the level of defaults . There are two clear options for working with default borrowers : prolongation, if interest is paid on time, and sale of the collateral.

The company is provided with a high level of equity capital , which at the end of 2019 amounted to RUB 72 million, and is able to fully repay its obligations to investors within three months. This is the time during which you can fully repay the portfolio and sell the default collateral.

It is important to note that during a crisis, the rate of issuing loans increases, while the value of the passive base remains stable until the next placement. Lombard Master has already raised interest rates on loans issued.

One of the risks that a company may face is a decline in gold prices between the time it is accepted as collateral and until it is sold at auction (in case of default). For these purposes, the company increases discounts during the period of price turbulence.

Artem Dogaev, founder of “Svetofor Group” :

– We are very positive about the results of the company’s work in 2019: revenue and net profit increased compared to 2018.

The attraction of funding made it possible to effectively invest in the development and commercialization of the results of research activities to create and improve the distance theoretical system for training drivers. Distance learning technologies are trending now like never before.

We plan to actively develop in 2020, increasing our presence in the constituent entities of the Russian Federation as part of our investment program on the win-win principle. The bottom line is that the company does not compete with current players in the constituent entities of the Russian Federation, but provides them with a high-quality service for the introduction of distance theoretical systems for training drivers in their educational processes. This allows partners in the constituent entities to increase the quality of the training services provided and, as a result, increase revenues and profits.

Since the company is implementing a strategy for the implementation and commercialization of distance learning technologies in the Russian market, in the current crisis conditions due to the spread of coronavirus infection, distance learning is a priority among consumers.

“Svetofor” operates in the Russian Federation, has no foreign currency debts and expenses, therefore the risks of devaluation for the company are very low.

At the same time, we have a fairly low level of debt and a good financial condition. The company will increase investments in improving the services of the developed distance theoretical system for training drivers, given the high demand. So we do not exclude the possibility of attracting new loans this year as part of our investment strategy.

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