Outlook for CIS non-financial companies remains negative on Russian GDP weakness in 2016 - Moody's
MOSCOW. Dec 10 (Interfax) - The 2016 outlook for non-financial corporates in the Commonwealth of Independent States (CIS) remains negative on the back of the expected contraction in Russia's GDP, weak domestic demand, continuing low global prices for oil and other key commodities, elevated borrowing costs and constrained access to public capital markets, Moody's Investors Service said in a special report.
"Our outlook for CIS non-financial companies over the next year remains negative, with low commodity prices, weak domestic demand, continuing recession in Russia, high borrowing costs and geopolitical risks likely to continue challenging the companies' operating and financial performance in 2016," said Victoria Maisuradze, Associate Managing Director responsible for the CIS markets in Moody's corporate finance team.
Moody's said that while it expects GDP to grow by 2% in both Ukraine and Kazakhstan, Ukrainian companies are exposed to very high event risk driven primarily by both domestic and regional political crises, as well as external liquidity vulnerabilities. However, Kazakhstan's operating environment will remain more favorable.
Constrained access to international debt capital markets for Russian corporates limits the potential for long-term investment, but does not pose an immediate threat to liquidity as most rated corporates have sufficient liquidity to repay debt through 2016, Moody's said.
Sovereign and geopolitical risks will continue exacerbating liquidity challenges for Ukrainian corporates. Kazakhstan's corporates maintain access to international capital markets, while the domestic banking system remains weak.