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Markets Shiver in Fever
April might become a month of instability for the monetary market, investment banks warn. The amount of money on banks’ corresponding accounts and the Central Bank’s deposits grew by 20 percent this week, reaching 833 billion roubles. Rates at the interbank market have considerably fluctuated as well, beginning from Monday. However, analysts do not expect a crisis. The markets are feverish due to the large amounts of Sberbank’s IPO money which has not yet returned to the market, due to companies’ reserving money for paying taxes, which happened at the same time with the preparation of competitors for YUKOS assets to the upcoming auctions.
The monetary market has been feverish lately. Cash liquidity (the amount of money on banks’ corresponding accounts and the Central Bank’s deposits) is comparatively high: it grew from 683.5 billion roubles to 811.8 billion roubles last week. Meanwhile, MIBOR rates for over-night interbank credits rose up to 5-6 percent (they usually fluctuate between 2-4 percent). A number of investment banks, including UFG Asset Management and Renaissance Capital, forecast as much as 8-10 percent. Yet, the forecast did not come true: MIBOR was 4.5 percent on Monday, according to the Central Bank.
Renaissance Capital published a review last week. It explains the risk of rate rising primarily by ‘extraordinary factors’. The bank’s analysts believe that in March and April 2007, frozen funds of Sberbank’s IPO, money transferred to deposits ahead of YUKOS assets auctions, and the funds reserved for paying taxes at the end of the quarter, should be subtracted from the normal index. Yaroslav Lisovolik of Deutsche UFG and Evgeny Nadorshin of Trust gave similar explanations.
One of the main factors which might cause an actual fall in cash liquidity is the upcoming tax payments. It is they that cause the chief uncertainty pointed out by economists. On the one hand, the Finance Ministry says the delay in the schedule of tax returns to the budget made up nearly 200 billion roubles in the first two months. That is about the same amount at which Renaissance Capital estimates the ‘extraordinary tax payments”. On the other hand, companies do not have any special reasons for accumulating money over the regular amount for tax payments. Companies began paying the tax on mineral resources extraction for February 2007 yesterday (if it corresponds to the average of the first two months of 2007, then it is about 80 billion roubles). On March 28, the third monthly pre-payment of profits tax for the first quarter is due. Taxpayers, who subtract the pre-payments from the actual earned profits, make payment for February 2007. It might reach nearly 70 billion roubles. The amounts of those payments usually do not vary much from month to month. Thus, the hopes that profits tax will secure a large raise to the Finance Ministry might be delusive.
However, economists were not so confident yesterday that rates would inevitably grow. One of the authors of Renaissance Capital’s review Nikolai Podguzov pointed out that the rate growth expectations might have attracted an additional influx of risk capital. Consequently, additional liquidity came to the market, and interest rates went down. Nadorshin agrees, saying that the Central Bank was actively buying up foreign currency last week “at $1-3 billion a day”.
According to different estimations, out of the current 833 billion roubles of liquidity, between 110-230 billion roubles are frozen in Sberbank, 120-160 billion roubles is deposited in Gazprombank accounts for the upcoming YUKOS auctions, up to 200 billion roubles might go for tax payments in the last days of March. At the same time, a similar situation where liquidity will be high formally, and affordable actually, on the contrary, might remain throughout April. The total cost of YUKOS assets offered for auction is $27 billion, said Podguzov.
Economists agreed that considerable volatility should be expected of the monetary market in the coming month, as well as a considerable influx of foreign capital (only Rosneft wants to draw a $22 billion co-loan). Rates at the monetary market might fluctuate, while the cash liquidity index, at which analysts often pay attention when reviewing the monetary market, might prove almost useless.
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Date:
January, 06, 2009 |
Moscow Time: |
Brussels Time: |
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