Euro Strategy: Issuer Exposure to Russia-Ukraine

CreditSights Staff

  • Russia, and to a lesser, extent Ukraine is a notable market for many European credits under coverage, but in the vast majority of cases direct exposure to operations and assets in these markets is not material at the group level.
  • Fortum and RBI on the Investment Grade side, Renault in the BB space and Oriflame in the B space, stand out as the few names with material exposure. Buzzi, Carlsberg, and Coca-Cola Hellenic also have meaningful exposure, though we expect it to be less of a focus with these names.
  • Given limited direct exposure within the European credit markets, we expect second and third order effects (commodity and energy pricing, the impact of sanctions, broader risk appetite, etc) to be more material drivers of spreads and investor attention in the coming weeks.
  • In addition to stand-alone sector pieces on banks, insurance and utilities, in this note we highlight direct exposures for the European automotive, building materials, chemicals, consumer, metals, packaging, paper, retail, services and telecom equipment sectors.

At the European corporate index level, direct exposure to credits with Russia or Ukraine as the country of risk is immaterial, making up just 0.3%, 0.4% and 0.7% of the ICE BofAML Euro IG, Sterling IG and Euro HY indices, respectively. Most of this direct exposure comes from a handful of credits, notably Gazprom, RZD Capital and Credit Bank of Moscow. Russian credits are more substantial dollar issuers, but still make up just 0.3% of the US IG index.

Russia, and to a significantly lesser extent Ukraine, is a relevant market for several credits under coverage, which we explore in this note focusing on direct exposure in terms of operations/assets in these two countries. However, with only a handful of exceptions – RBI, Renault, Fortum and to a lesser extent Buzzi, Carlsberg and Coca-Cola Hellenic in IG/XO and Oriflame in HY – direct exposure is not material at the group level.

Euro Strategy: Issuer Exposure to Russia-Ukraine

CreditSights Staff

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