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Russian Corporate Liquidity Mitigates Capital Flight Risk 

April 23, 2014

A market-led rationing of foreign capital is the most immediate threat to the Russian corporate sector from the crisis in Ukraine , Fitch ratings says. However, a detailed analysis of the liquidity profiles of Fitch-rated Russian companies shows that the sector as a whole is well-placed to withstand a protracted reduction of foreign capital inflows.

Since the start of the crisis credit default swaps on Russian bonds have widened by over a third, reflecting growing risk perceptions, and we have heard anecdotal evidence that Western banks are looking at the country with a more critical eye. While this response from international investors has been muted so far, it does highlight the risk that foreign capital could become scarce if the crisis escalates. "We believe this is a more immediate risk than comprehensive trade or financial sanctions, which would come at a very high price for both Russia and the rest of the world," Fitch Rating says.

Read more: FinChannel

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