12.01.2009 - MDM Comment: Mosoblast, Bank Soyuz, Mirax

Russian markets are very slowly waking up after the long holiday session. The key story is the weakening of the ruble, which has gained pace. The basket is now trading at 35.80, meaning the ruble has lost some 14% since the beginning of December. We see no activity in Eurobonds, and only some ‘technical’ trading in local bonds. The latter is basically the unwinding of fake trades made in the last days of December to inflate P&Ls.

Below, we briefly present some of the corporate credit news that has caught our attention (we reported on Russia's list of ‘systemically important companies’ earlier today).

- Moscow Oblast (SD) may decide to liquidate its subsidiaries MOITK (SD) and MOIA (NR) due to mismanagement at those companies, according to an official press-release from the regional government. MOITK and MOIA are large companies fully owned by Moscow oblast, and currently have bonds outstanding, some of which have explicit or implicit guarantees from the administration. MOITK has some USD500 million of cash capital, contributed by the Moscow oblast. There have apparently been multiple violations and fraud within the administration itself, as well as its subsidiaries. The fact Moscow Oblast is considering liquidation implies that it wants to distance itself from the subsidiaries and let the firms go bust (liquidation is equivalent to bankruptcy). Earlier action with a similar aim was the "arrest" of MOIA's ruble bond issue, on which Moscow oblast was effectively a guarantor.

- One of Gazprom’s subsidiaries will acquire Bank Soyuz (B2/B-), according to an accord signed by the parties before the New Year (Source: Vedomosti, Kommersant). The bank's bonds are not liquid, but a few weeks ago the short-dated USD-denominated BSOYUZ 09 issue was seen trading as low as 40% of par, which now looks like a great value given Gazprom's affiliation.

- Mirax Group (B3/B) is reportedly in talks to sell its Turkish hotel assets, which it acquired in 2007 for over USD300 mn, according to Debtwire, which references a Turkish newspaper. Any asset sale (if at ‘fair value’) should of course be credit-positive in the short-term. We cannot go beyond that in analyzing this news, since the abovementioned assets were held by Mirax's affiliated parties and never consolidated in the company's publicly disclosed accounts.

12.01.2009 16:23