Deutsche Bank: Russian enterprises will be hit hard by rising financing costs

US stock market center: Exclusive offer full industry sector stocks, premarket after-hours, ETF, warrants night network real-time quotes, nightlife network Finance YORK, Dec. 24 news, to curb the severe devaluation of the ruble and inflation expectations soared, December 16 Russia's central bank [microblogging] the benchmark interest rate from 10.5% increased dramatically to 17%。This will aggravate Russia's economic recession and caused the Russian corporate financing costs have risen sharply, the most affected metals and mining giant Mechel next two years may profit dropped 40%。  Deutsche Bank (Deutsche Bank), chief market strategist at Russia's Yaroslav Lissovolik pointed out that soaring interest rates will curb credit growth in Russia, while countering consumption and investment。More importantly, for those high debt burden of enterprises, rising interest rates will increase debt service pressure。  Russia's central bank to raise interest rates significantly affect the cost of financing the Russian economy through two channels, one bond yields rise, the second is the rise in the banking sector short-term and long-term cost of financing instruments。  Russia's central bank to raise interest rates to 17% after the Russian federal government short-term bond yields rose four percentage points to 17-18%, long-term yields rose three percentage points to 15-16%。Similarly, higher corporate bond yields also simultaneously, through the bond market means that companies will have to pay higher borrowing costs。  In addition, under Western sanctions and the impact of the ruble crisis, Russian companies may become increasingly difficult to obtain financing from international capital markets。Deutsche Bank said in a report the next few years Russian companies may be forced to convert external debt into domestic debt。From this point of view, domestic financing costs for Russian companies will become more important。  According to the analysis of Deutsche Bank, rising interest rates on the higher debt burden metals and mining sector the hardest hit, followed by industrial, utility and telecommunications sector, by contrast, real estate, consumer goods and other sectors less affected, and some cash-rich oil and gas companies but may be benefit。  Deutsche Bank analysis shows that, for rising interest rates on corporate 2015– effects of 16 years of earnings per share (EPS), and metals and mining company Mechel, Rapsadskaya and TMK are likely to fall 40%, 37% and 18%, public utilities such as water and electricity in Russia The company is also up more than 20% decline。However, Russia's third largest oil exploration company Surgutneftegaz holds $ 33 billion in cash on hand, its high interest rate environment may actually be advantageous。(Shofu compilation)