Dec. 7, 2021

Vladimir Tatarchuk talks about economic trends and what awaits the special situations market in Russia.

Interview with the Cbonds YouTube channel regarding the "Visiting PREQVECA" project

In response to questions about the special situations market and its specifics, Chairman of the Board of Directors and Partner of Proxima Capital Group, Vladimir Tatarchuk, said that in the long term, this market had great potential for growth in Russia. "Russia traditionally has a tolerant attitude towards risk, and today almost all major private corporations are interested in this segment. In the future, the special situations market will develop and become institutionalised, it's only a matter of time.".

Vladimir estimates the return on investments in distressed assets and special situations in Russia at the level of 30 to 60%. "You can build a scale of returns depending on the level of risk. For example, one of the lowest-risk segments are real estate investments, where a good level of return would be 10 to 15%. Concerning private equity funds, the risks are higher, but the returns are higher too, from 20 to 25%. The yield on investments in distressed assets and special situations is knowingly higher than 30%, and stands at from 30% to 60%.

The interview separately touched on the topic of corporate bonds in Russia. According to Vladimir Tatarchuk, this is a very specific instrument for our country. On the one hand, it is very much in demand by companies, but on the other hand, it has its own risks. "As soon as a company gets to the point where it can issue bonds, it does so. The interest rate on them is lower than on a bank loan, a bond loan requires no collateral, there is no one strong lender to deal with. But there is another side to the coin, today the regulator in Russia is very tolerant towards banks, so in case of market turbulence it is much easier to negotiate with a bank rather than with bondholders. Those who invest their projects via bonds should understand that in order to get a restructuring of such debt you have to start the process several months in advance. And the skill of working with this instrument is less and less represented in the Russian market," said Vladimir Tatarchuk.

The interview also touched upon the future of the global economy. Vladimir Tatarchuk noted that we should expect the economy to slow down next year as the pandemic situation continues. "The pandemic, which unfortunately continues, has brought great changes to a variety of sectors of the economy. I would describe 2021 as the year of recovery from the first shock, but the positive dynamics this year are more of a fluctuation, and next year we can expect the global economy to move downwards again, slowing down global economic development," said Vladimir Tatarchuk. - “At the same time, one of the main reasons for the slowdown will be China, whose economy has accumulated many imbalances”.

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