OREANDA-NEWS. Russian corporate liquidity is generally adequate across Fitch Ratings' portfolio, thanks in part to a rapid response to signs of an economic slowdown in Q413, which led companies to focus on deleveraging. Seven of 55 rated Russian corporates could experience liquidity pressure in 2015, with consumer companies relatively poorly covered by available liquidity sources. Our ratings already reflect where liquidity is weak and no remedies are available.

The findings are discussed in our report "Russian Corporate Liquidity 2015", published today, which tests the capacity of rated corporates to repay their debt obligations in 2015 and 2016. The study found a further 16 companies have not fully covered their 2016 liquidity needs. But this is far enough in the future to give them a number of options, particularly capex cuts. Russian corporates are already urgently reviewing their investment plans following the sharp fall in the rouble late last year.

Three of the seven companies with refinancing needs in 2015 are consumer companies - O'KEY Group (B+/Stable), Agri Business Miratorg (B/Positive) and Sodrugestvo Group (B/Negative). The other four are Sukhoi Civil Aircraft (BB-/Negative), Rostelecom (BBB-/Negative), RusHydro (BB+/Negative) and Sovcomflot (BB-/Stable). Each has its own distinct situation, but none face burning liquidity issues that cannot be addressed.

Domestic banks will remain the key funding source for Russian corporates while the Eurobond market is effectively closed to most Russian issuers, foreign banks are sharply cutting exposure and the Russian bond market remains moribund. The banks will be reliant on the state and the Central Bank of Russia for funding and capital to maintain their lending capacity.

We believe substantial new funding for corporates is unlikely, but domestic banks should be able to at least roll over existing debt. Rouble lending is likely to be sufficient to help corporates repay their FX debt as long as the FX market in Russia remains functional.