This year, risks associated with refinancing are unlikely to arise, moreover, 2010 is a window for attracting long-term external loans, then the rates will grow, says Natalia Orlova from Alfa Bank . The stabilization of the ruble has again awakened interest in foreign currency loans, she continues. This does not suit the Central Bank, which at the end of last year proposed a scheme for tax disincentives for foreign currency loans, and the Ministry of Finance, which supported the regulator. "It's a matter of weeks," Finance Minister Alexei Kudrin promised to consider the Central Bank's scheme. Currently, companies can reduce their profit tax by including interest payments on foreign currency obligations at a rate of up to 15% (up to 22% for loans taken before November 2009) in their expenses. The Central Bank proposed reducing the limit from 15% to 3%.

This year, Russia will have to pay off $106.4 billion in foreign debt, including $69.4 billion to companies and $32.3 billion to banks, with the rest owed to the state, according to Central Bank data. In 2009, the task was comparable ($116 billion), and the government urgently set aside money to save borrowers from bankruptcy. Over the year, the debt was reduced by only $10.2 billion (see inset). Of the $50 billion reserved for loan repayment, only 20% was distributed, and the program was already curtailed in February.

The average yield on Eurobonds in the second half of 2009 was 8.6%, says Oleg Solntsev from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF): according to the new rules, borrowers' losses will amount to up to 1.5% per annum. "Small exporters will lose out," he thinks. The largest corporations and banks - the main borrowers - will hardly feel the changes, for them the cost of loans is close to 3%, says Sergei Moiseyev, Director of the Center for Economic Research at the Moscow Financial and Industrial Association. The cost of the syndicated loan of $700 million and 100 million euros under LIBOR/EURIBOR + 2.75% attracted by VEB in mid-January now corresponds to 3.24% per annum in dollars, the cost of $230 million attracted at the same time by Bank of Moscow is 3.58%. Of the recent deals, the most expensive is the $365 million loan to Tatneft, issued in November at LIBOR + 6.85%, or at 7.23% per annum at the current moment. The difference in interest rates on ruble and foreign currency loans exceeds 10%, so foreign currency loans will remain attractive, Moiseyev believes.

Interest payments of banks and companies in 2010 were $16.2 billion, or about 454 billion rubles (at the rate of 28 rubles/$, forecast by the Ministry of Economic Development). If the entire amount is deducted from the taxable base, borrowers will save about 90 billion rubles, if the maximum rate is reduced to 3% - only 18 billion rubles, calculated Valery Mironov from the HSE Development Center. At a rate of 15%, the loan will become more expensive by 2.4 percentage points per annum, at a rate of 7% - by 0.6 percentage points. At the same time, profitability will decrease by 0.4-0.5 percentage points (9.9% - for January - September 2009), estimates Mironov: "This requires a symmetrical reduction in the Central Bank refinancing rate, so as not to discourage investment activity."

The Finance Ministry itself, with oil prices at $70, will resort to external loans for five years to finance the budget deficit, said Kudrin; the planned volume of placements for 2010 of $17.8 billion has not yet been revised: "We will place them during the year in favorable market conditions" (quoted by Interfax). There is no need for this, says Yevgeny Gavrilenkov from Troika Dialog: in 2010, even with oil prices at $60, the budget deficit will not exceed the volume of the reserve fund (1.8 trillion rubles) due to the restoration of industries and the expansion of the taxable base. And then the funds raised will most likely be used to support the least efficient sectors of the economy, i.e. to reduce its overall efficiency, he emphasizes. Orlova agrees that there is no need to borrow: "But later the rates will be higher - perhaps the Finance Ministry's logic is to borrow while it is cheap."

Foreign currency debts will become more expensive for Russian companies