Foreign Banks Halt Dealing with Belarus

Banks’ decision was preceded by the August meeting in Warsaw of the human rights activists from Free Belarus Now and Index on Censorship with German Chancellor Angela Merkel, who promised to address the management of banks to halt deals with the Belarusian authorities. Deutsche Bank has obviously followed the call of the German Chancellor, writes British newspaper The Independent.

October 25, BNP Paribas confirmed that it, too, had pulled out any future deals with the official Minsk.

"After December 19 (the presidential elections) we stopped all our activities in Belarus, except trade related financing. Our only action was to close the transactions which we had committed to before 19th December. The bond issuance took place one week after this date for that reason. To date, we are not working on and do not plan any new transactions with the state of Belarus," said a spokeswoman for BNP Paribas.

Mike Harris, head of advocacy at Index on Censorship, which has led the campaign to shame investors in Belarus, said: "Deutsche Bank, RBS and BNP Paribas were propping up a dictatorship. We're delighted they have pulled out, leaving Lukashenko with few options other than to release his political prisoners.

Thus, of the original four banks, only Sberbank has yet to say it will not do business with Lukashenko. "We will keep campaigning until it does," Mike Harris said.

Belarusian Eurobonds Sold at 30% Discount

The positions of Belarus’ debt securities, located in the European market, are rapidly falling due to the fx market situation, increased investment risks, as well as lowering of Belarus’ sovereign credit ratings. By late October, the price of Belarusian Eurobonds has declined by 68-70% of par value, that is, bonds are sold at a 30% discount, reported "Belarusian News."

Today only Greek Eurobonds’ quotes are worse than in Belarus. Their price ranges from 37% to 42% of par.

Among the factors influencing the reduction of the Belarusian bonds’ quotes, financial analysts mention an increase of external debt in GDP caused by the ruble devaluation, as well as the problems of attracting foreign investment.

"Terms of Beltransgaz stake sale remain uncertain. The prospects to profit on MTS sale are also unknown. Finally, it’s also unclear if we’ll manage to obtain a $1billion loan from Sberbank," said analyst of Study Group BusinessForecast.by Alexander Muha.

According to financial experts, the Belarusian Eurobonds quotes will depend on the outcome of negotiations with the IMF over a new loan.

As Telegraf previously reported, in late August, British Royal Bank of Scotland halted deals with the government of Belarus under pressure of international human rights organizations. Along with Deutsche Bank, BNP Paribas and Sberbank of Russia, it was an arranger of debut Eurobond placed by Belarus in summer 2010. Then Belarus placed Eurobonds for $600 million for five years with a coupon rate of 8.75% per annum. Eurobonds are to be repaid in 2015.