Kremlin will bail out Russian business

The Kremlin has approved a list of 259 Russian companies that it will provide with complete financial support if required.

The declaration enhances the credit risk profile of these Russian businesses and reduces the probability of default, according to Jardine Lloyd Thompson.

‘As Russia seeks to establish long term financial stability within its markets, the unofficial commitment from The Kremlin marks a significant turning point for the credit risk profiles of some of the region’s most influential businesses,’ said Doctor Elizabeth Stephens, head of credit and political risk analysis at Jardine Lloyd Thompson.

“It is no coincidence that industries considered of strategic importance are increasingly well represented.

Elizabeth Stephens, Jardine Lloyd Thompson

However, while trading risk has decreased, businesses must be braced for future investment volatility, added Stephens.

‘Although it is logical for the government to provide financial support to companies hit by the credit crunch, as Western governments are doing, it is no coincidence that industries considered of strategic importance are increasingly well represented,’ she said.

‘[The Russian] government has the resources to support struggling enterprises. This stands in contrast to Ukraine and some Central Asian states, where there may be a propensity for governments to secure assets as they run short of money. In those countries that are already in deficit and/or do not have the strategic reserves of Russia, some governments and companies are over committing and may be unable to meet their debt obligations.’