Russia's TMK sees higher rouble borrowing costs as sanctions bite

Вторник, 28 октября 2014 21:36 MSK

* Considers IPO of U.S. unit TMK IPSCO

* Has more pipe orders in Russia as global rivals retreat

By Maytaal Angel

LONDON, Oct 28 (Reuters) - Russia's largest steel pipe maker TMK is considering an initial public offering for its U.S. unit to help offset an expected 1-2 percentage point rise in rouble borrowing costs over the next few years as Western sanctions bite.

Russia's economy has come under intense pressure this year because of sanctions over its intervention in Ukraine. Its central bank has had to hike rates three times to support the rouble, while its banking system has been starved of dollar funding.

"We expect the cost of financing will increase for us ... in the next two to three years, not dramatically, by about 100-200 basis points, but this could be considered an impact of sanctions," TMK chairman Dmitry Pumpyanskiy told Reuters on the sidelines of a company presentation in London.

Russia's economy is set to stagnate in the next two years, according to World Bank forecasts, as the Ukraine crisis rumbles on, keeping relations between Russia and the West at their lowest point since the cold war.

Pumpyanskiy said the current economic situation has prompted TMK to consider an IPO of TMK IPSCO, its U.S. unit. He also affirmed TMK's plan to decrease its net debt to earnings (EBITDA) ratio to 2.5 by end 2016-beginning 2017 from a ratio of 3.6 to 3.8 currently.