The nightmare of financial markets’ volatility worsened after the first attack of Russia to Ukraine. Gold, oil prices, and, US dollar skyrocketed. What happens in overall Asian bankers would be liquidity is indeed there, but borrowing or lending activities take pause as a result of geopolitical tensions.
Regularly, the loan instrument’s floating-rate nature helps the market to volatility. Loan product is the bank’s key essential relationship-driven ensuring the lending activity. So, loan markets remain open for the right credit.
However, due to the geopolitical tensions upheaval early this year, credits are getting weaker.
Last week ratings of issuers in Asia Pacific do not expect the second-round tensions. But it attacks through the scary rise of Asian commodities prices, trade effect, and market disruptions, said IFR Asia.
Based on bankers analysis, Asian TLB financings would be suffering from volatility the most when they tap into Asia banks and institutional investors. On the other hand, loans relying on Asia banks liquidity would not suffer direct impact from Russia-Ukraine.
Financings must be ready to face increased market volatility risks in 2022 said head of leveraged finance and loan syndication, Peter Colwell. Russian banks moreover are subject to U.S. sanctions, but they play a little part in Asian syndicated loans. Asian banks such as Japanese and Chinese banks are lenders for Russian borrowers, the only two that can give exposure.
For instance Irkutsk Oil signed a $871m loan on December 29 from Japan Bank. For now, some of the Asian lenders review possible sanctions for Russia. But the biggest concern would be whether or not the sanction can redeem the situation. Russia-Ukraine tensions and uncertainties for the market so far, makes Asian lenders and borrowers are mindful to decide.
