Russia Faces Rising Costs in Yuan Financing Amid Liquidity Crunch

The increasing expense and scarcity of yuan financing in Russia are straining corporate finances, as companies grapple with higher borrowing costs and a wave of debt.

• Yuan financing is becoming increasingly expensive and scarce in Russia, impacting companies' access to foreign capital.
• Major Russian companies, including the biggest miner MMC Norilsk Nickel PJSC and the largest oil producer Rosneft PJSC, are facing rising debt servicing costs.
• The Russian central bank reports that yuan bonds have not become widespread due to limited liquidity and the need for higher yields.
• Loans in the Chinese currency nearly quadrupled to a record $46 billion in 2023, but their share in corporate credit portfolios remains in single digits.
• Russian companies and the government face barriers in borrowing within China due to capital controls, complicating the repatriation of funds.

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