...Slowing Economy May Constrain Tariff Growth Fitch expects the Russian economy to contract by 4% in 2015 and for electricity consumption to fall as a result. However, demand for electricity may benefit from increasing production of export-oriented commodities. What to Watch Liquidity: Most Russian utilities are well placed in the short term to withstand local-currency depreciation and to continue to service their debt. This is primarily because of their sufficient liquidity and credit facilities from large domestic banks, which comfortably cover 2015 maturities and should be sufficient to fund 2015 negative free cash flows. However, new funding will be required to finance 2016 capex, which will be revised down should funding not be available. We do not expect utilities' credit metrics to dramatically increase following the recent rouble devaluation as they have generally avoided taking on foreign-currency debt. Tariffs: To restrain inflation, regulated electricity tariffs may be kept below...
