OREANDA-NEWS. Russian’s foreign debt burden shrank by almost a fifth last year as sanctions over the conflict in Ukraine prevented sovereign and corporate borrowers from refinancing abroad.

Outstanding debt fell to \\$599.5 billion by the end of 2014 from \\$728.9 billion a year earlier, according to central bank estimates today. That compares with a 15 percent increase in overall foreign liabilities in the year-earlier period. Banks and companies account for about 90 percent of total debt, the data sho.

Russian companies are deleveraging after U.S. and European sanctions over Russia’s alleged role in stoking separatist violence in Ukraine made it almost impossible for them to roll over debt abroad. Slumping crude prices have exacerbated the penalties, driving up the borrowing costs of companies in the world’s biggest energy exporter.
“This essentially led to an accelerated decrease in external debt, which can positively influence the mid-term leverage of Russian borrowers,” Alexander Ovchinnikov, a managing director of RusRating rating agency, said in an e-mailed note.

Russian corporate Eurobonds were the fourth-worst performers in emerging-market debt last year, handing investors a loss of 13 percent, data compiled by Bloomberg show. That compares with a return of about 3.4 percent for the Bloomberg Emerging Markets Corporate Bond index.